LONDON – This week has seen plenty of announcements to do with UK airline Flybe, with the most significant coming from Virgin Atlantic (VS), who seems to be in takeover talks with the regional carrier.
According to UK media, Virgin Atlantic has opened these discussions up with Flybe’s advisers about making an offer, around four years after the closure of Little Red, Virgin’s attempt at regional domestic operation in the UK.
The Little Red subsidiary launched in 2013, where it gained slots from British Airways, as ex-British Midland slots had to be handed over back to the market for acquisition.
But only two years later, the carrier stopped operations due what has been dubbed a “meagre package of slots,” with which it had operated.
It is understood that Flybe’s takeover would benefit VS because of additional landing slots at Heathrow, which are currently assigned to domestic flights.
The closing share prices in the London Exchange, which closed on November 22, saw Flybe coming up with a value of around £20 million, which would probably be the offer VS would put forward for a potential takeover.
The regional carrier operates 218 routes in 10 countries, mostly focusing on smaller, secondary airports.
Flybe put itself up for sale last week due to rising oil prices, increased costs across the board, as well as deepened price-based competition.
Another benefit for Virgin Atlantic would be the fact that it could consolidate connectivity out of the likes of London-Heathrow and Gatwick, as well as its other bases.
The Stobart Group are seen as the competitor on these negotiations due to the close relationships that is already established with Flybe.
Stobart had expressed interest in the past for the regional carrier, but Flybe had previously rejected any offers from them.
Stobart is also going through legal issues between board members and its former chief executive, so the likelihood of seeing them place a serious bid for Flybe is, at the moment, very low.
It is also understood that if the deal goes through with Virgin Atlantic, then we could see the Flybe brand disappear, according to analysts.
This would obviously open up the speculation of potential Virgin Atlantic Dash 8 Q400 liveries flying around the UK.
On a beneficial perspective, having a bigger carrier like Virgin Atlantic on the carrier’s side for a takeover would offer the capital needed to fund the carrier, as well as a guaranteed network that would bring inherent growth and benefits for shareholders and both carriers’ consumers.
It could consolidate operations out of the Stobart base in Southend as well as current operations in the likes of Exeter, Southampton and Manchester etc.