RE: Now an article just released in FT23 Nov 2018 16:08
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https://www.ft.com/content/e46bbbba-eef6-11e8-8180-9cf212677a57
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https://www.ft.com/content/e46bbbba-eef6-11e8-8180-9cf212677a57
Shares in troubled UK regional airline Flybe surged after it emerged the carrier was in talks with Virgin Atlantic about a potential takeover.
Virgin, which is majority-owned by British business tycoon Sir Richard Branson, confirmed the discussions in a stock market statement, sending Flybe’s shares up nearly 90 per cent to 18.1p.
The carrier’s shares had fallen more than two-thirds over the past month in the wake of a profit warning and its announcement of plans to sell.
Virgin said it was “reviewing its options . . . which range from enhanced commercial arrangements to a possible offer for Flybe”.
The two companies already have a code-sharing relationship, where they market some of each other’s flights, Virgin added.
Flybe said: “There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.” The company has said it is in discussions with more than one party.
Low-cost carrier easyJet and infrastructure company Stobart Group are also considering buying part or all of Flybe.
Virgin’s interest in Flybe would be in securing a network of flights from around the UK to feed its profitable long-haul business.
A former Flybe executive said: “Partnership with Virgin becomes more important because Flybe can provide more feeder flights. [Flybe] has limited value but that could become something interesting if you have the ability to grow that.”
Flybe has valuable slots at capacity-constrained airports including Heathrow, Amsterdam’s Schiphol and Paris Orly, and the French flights could make it more attractive to Virgin.
Sir Richard owns 51 per cent of Virgin, but he is in the process of selling 31 per cent to Air France-KLM.
Mark Manduca, analyst at Citi, said there was significant “overlap of Flybe and Air France’s network” and envisaged a combination in a recent note.
Virgin tried to crack the UK regional market in 2012 when it acquired a package of landing slots at Heathrow for domestic flights, setting up its Little Red subsidiary.
However, it closed Little Red in 2015 after sustaining severe losses. Flybe acquired the use of some of those slots in 2017.
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