Connect Air made an offer for Flybe on January 19th that would see it rebranded as Virgin Atlantic. One of Connect Air’s shareholders is Stobart Aviation, part of the Eddie Stobart Group.
Some of the shareholders were not happy about getting basically 1p per share. However Flybe was desperately short of cash and needed Connect to fund it with the £20m it provided as interim investment, before the buyout was completed.
One large shareholder tried to oust the Flybe chairman but that failed. Then a former CEO of Stobart Aviation (who allegedly has a grievance with Stobart Group), now claims he has alternate funding that can save the airline from sale to Connect.
This is all very well, but Flybe is at a stage where it simply cannot afford to just take a short term saviour to get through another year with no idea what happens next.
It may suite individual shareholders to be short term in their approach but it simply isn’t viable for Flybe as a company.
Rumours have been floated suggesting that IAG may be behind this – their long running feud with Virgin Atlantic would be ammunition for the rumour, but an IAG/British Airways take over would run into serious competition issues over control of U.K. domestic flights, and likely fail, without it divesting itself of many of the routes Flybe would provide.
Meanwhile Flybe has said it will now agree to a shareholder meeting its so far resisted, which could drastically alter the way things pan out.
Unsurprisingly Connect are said to be furious having already provided Flybe with £10m in cash support.
Flybe’s board is said to be staunchly supportive of Connect – but aggrieved shareholders don’t appreciate how little they’re getting back on their investment. My only comment in that is who invests in any airline that can barely get through 12 months and for whom profits are almost unheard of? It’s time to face the realities of airline ownership.