Business Irish

Friday 24 January 2020

Flybe facing turbulence after bailout rumours

Reports point to government talks

Talks: Concerns have been raised over the future of regional airline Flybe
Talks: Concerns have been raised over the future of regional airline Flybe
John Mulligan

John Mulligan

AER Lingus Regional's sister airline Flybe has remained tight-lipped on whether or not it is battling for survival, just a year after the struggling UK carrier was acquired by a consortium including Stobart Group, Virgin Atlantic and US private equity firm Cyrus Equity Partners.

Flybe - Europe's biggest regional airline - is reportedly in talks with the British government about a bailout to prevent its collapse. It operates services from the UK to Dublin, Cork, Ireland West and Belfast, among other locations.

UK-based Stobart owns the Dublin-headquartered Stobart Air, which operates the Aer Lingus Regional service on a franchise basis. Stobart Air is part of the Connect Airways consortium that owns Flybe.

Sky News first reported that Flybe was in urgent talks with the UK government, designed to secure support that would save as many as 2,000 jobs at the carrier.

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But Flybe said it did not comment on "rumour or speculation" and that it continued to provide services so that passengers could travel as planned. Stobart Group refused to comment.

Social media was bustling yesterday with people wondering if it was safe to book a flight with Flybe.

Last year, Icelandic carrier Wow Air was criticised for selling flights right up to the morning it collapsed.

The Connect Airways consortium agreed to buy Flybe this time last year after the airline put itself up for sale.

Flybe's cash reserves were being depleted and credit card companies processing bookings were withholding more of the cash paid for those tickets because of the airline's financial position.

Connect Airways, which appointed Virgin executive Mark Anderson as its CEO, paid just £2.2m (€2.6m) for Flybe but pledged to pump £100m of loans into the airline to keep it flying.

Stobart Air owns 30pc of Connect, as does Virgin Travel Group, a subsidiary of Virgin Atlantic. Cyrus owns 40pc.

Stobart Group CEO Warwick Brady said at the time that the acquisition of Flybe and its amalgamation to Connect Airways, along with Stobart Air, would enable the business to operate effectively in a competitive market.

He insisted that the new group would be a "powerful combination".

But the acquisition of Flybe by Connect Airways was not cleared by the European Union competition watchdog until July last year.

By that stage, Connect had already pumped millions of pounds of loans into Flybe without having control of the carrier.

With the value of sterling against the dollar having been hit badly last year amid concerns of a disorderly Brexit, Flybe also faced a tougher fuel buying environment in 2019, generating revenue in sterling but paying for fuel in US dollars.

Irish Independent

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