Saturday 24 February 2018

Stobart's CEO won't rule out approach for Flybe

Warwick Brady
Warwick Brady
John Mulligan

John Mulligan

The boss of the UK's Stobart Group, whose aviation unit operates the Aer Lingus Regional franchise service, has refused to be drawn on whether the company would be interested in buying UK regional carrier Flybe, but insisted that it is "looking at everything" to grow its business.

"I think our business will play an important part in rationalising capacity in the UK and European market," the new Stobart Group chief executive, Warwick Brady, told the Irish Independent.

"We're certainly strategically looking at everything. Remember what our end game is: we want to grow an aviation business that's going to profitably support the dividend."

Stobart Group, a quoted company, whose interests also span bioenergy and railway engineering services, also has a franchise agreement with Flybe, which it inked late last year.

Aviation sources claim that a takeover of Flybe by Stobart Group could make sense as Stobart looks to grow passenger traffic at London Southend Airport, which it owns. Among the routes Dublin-based Stobart Air is launching is a Flybe service between Dublin and Southend.

Mr Brady, a former EasyJet and Ryanair executive, joined Stobart Group last year and took over the reins last week.

He is seen as having been instrumental in reassessing a planned takeover of Stobart Air by CityJet. That proposed deal collapsed last December following months of negotiations, but Mr Brady insisted that the relationship isn't soured.

The former CEO of the Stobart Group, Andrew Tinkler, now heads Stobart Capital, an investment vehicle charged with targeting deals in the aviation and energy sectors.

"We've got Stobart Capital as a separate business and his job is to look at entrepreneurial opportunities to bring to the group to support aviation and renewable energy. The question around Flybe, maybe you should ask us in two or three months," said Mr Brady, who took over as CEO last week.

"We're a business that is transforming from what was a truck business into an aviation and renewable-energy business and we're trying to create a clear strategy with proper targets. We're looking at everything."

Stock exchange-listed Flybe, headed by former CityJet chief executive Christine Ourmieres-Widener, has a market capitalisation of just £77.5m (€88.3m), with its shares trundling along near historic lows.

It has made a full-year, pre-tax profit only twice since its 2010 stock market debut. In its last financial year, it generated revenue of £707m and an adjusted pre-tax loss of £6.7m.

But while industry speculation has been growing that Stobart Group could be eyeing Flybe, Mr Brady pointed to the airline's challenged history.

"Flybe is a well-chewed transformation story that's not been successful," said Mr Brady. "So, you really have to truly believe that you know better.

"Jim French (a previous Flybe CEO) tried it. Saad (Hammad - who was Flybe CEO from 2014 to last October) has tried it. Both unsuccessful."

Ms Ourmieres-Widener took over as Flybe CEO in January. She told the Irish Independent in May that the airline could be sustainably profitable.

Both Mr Brady and Stobart Air chief executive Graeme Buchanan stressed that Stobart Group's franchise with Flybe is valuable in terms of growing traffic at London Southend.

Read the interview in full

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