Virgin Atlantic buys Flybe for £2.2 million

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Virgin Atlantic, Stobart Aviation and Cyrus Capital have formed a consortium (Connect Airways) to purchase Flybe, Europe’s largest regional airline based in Exeter in the UK.

Connect Airways will be the sole shareholder in the company, Flybe will cease to exist and the company will be re-branded as Virgin Atlantic.

Connect will loan Flybe £20 million to maintain its current operations until the sale is complete, and then provide another £80 million in investment and growth.

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Stobart Airways (owned by Stobart Group) which will own 30% of the business will also be incorporated into Connect Airways (the holding company) and be rebranded as Virgin Atlantic. Virgin Atlantic Travel Group (owned in turn by Virgin Group), will own 30% with the remaining 40% owned DLP Holdings, which is owned by Cyrus Capital.

While in legal and financial terms a totally independent company, with a separate AOC (in fact two AOC’s as the Stobart Air aircraft will remain under their own), the effective day to day running of the airline will eventually look seamless with the rest of Virgin Atlantic.

One of the key aspects of this is providing regional UK and Irish connectivity to Virgin Atlantic’s main hubs at Heathrow, Gatwick and Manchester. This is way beyond the Little Red idea, creating a truly integrated regional operator, with routes that are frequently unique, often with no competitors.

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It also offers a high level of European connectivity giving Virgin Atlantic even more opportunities to link its long haul operations in the EU.

The benefits to customers will be immeasurable. Virgin Atlantic’s FlyingClub mileage scheme will become available, and the purchase by AF-KLM of shares in Virgin Atlantic as part of the new joint venture with Delta, will tie the regional airline into existing routes to Paris, Amsterdam, Milan, and so on.

The wider aspects of the purchase are of global significance as it adds all of the UK domestic routes to Delta’s portfolio, as well as AF-KLM’s when the JV is completed later this year and the various websites are linked up.

Another key aspect is the eventual completion of the third runway at Heathrow, which is largely expected to be devoted to short-haul and UK domestic airlines, leaving the other two runways for larger aircraft. This will increase capacity and provide better links for the long-haul arm of Virgin Atlantic.

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