Virgin Atlantic Is Still Thinking About Acquiring Flybe

Simple Flying has learnt that Virgin Atlantic is still interested in purchasing struggling British airline Flybe. The news would’ve delighted shareholders right before Christmas as shares in Flybe increased by 10%. Back in October Flybe issued a profit warning ahead of releasing financial results. Around a month later in mid-November, the airline announced that it was putting itself up for sale. This prompted rivals Virgin Atlantic and IAG, owners of British Airways, to express interest in the airline. In November Flybe was valued at £26m, about a quarter of the £100m it was once valued at.

£22m Loss

The recent weak performance of Flybe’s shares can be attributed to its recent financial performance. Flybe said that it would post losses of £22m for the full year. In fact, the airline attributed these losses to poor weather in the winter, a poor sterling exchange rate, and high fuel prices for most of the year. Now, following interest from both IAG and Virgin, shares in the airline have risen a total of 45% since the airline was put up for sale a month ago.

Flybe Virgin Atlantic
Virgin Atlantic already have a trading and codeshare relationship with Flybe. Image: Skynews

Virgin Atlantic Interest

Back on the 23rd of November Virgin Atlantic stated that they would be “reviewing its options” regarding Flybe. As the airline has a number of codeshares in place with Flybe, it is in Virgin’s interest for the airline to stay afloat. Additionally, Virgin Atlantic has an existing trading relationship in place with Flybe. Virgin Atlantic told Simple Flying that negotiations between management at both airlines are continuing. However, the airline also made it clear that no deal is guaranteed. In an emailed statement, a representative from Virgin Atlantic told Simple Flying:

Following our statement on 23 November 2018, Virgin Atlantic confirms that we continue to review our options in respect of Flybe, including potentially making an offer for Flybe. Discussions with Flybe and its management are continuing. Virgin Atlantic emphasises there can be no certainty that any offer will be made nor as to the terms upon which any offer may be made.”

Acquiring Flybe could allow Virgin to break into the regional UK market, following the failure of Little Red.

Competition For Virgin

While Virgin is reportedly interested in purchasing Flybe, other airlines are also reportedly interested, potentially pushing the cost up for Virgin. While IAG who own British Airways have widely reportedly been interested, the Stobart Group are also reportedly interested in Flybe. Owners of London Southend Airport, The Stobart Group already operate a number of Flybe services. In total Stobart Air operates 13 routes for Flybe under franchise and a further 4 routes under a wet-lease agreement. Additionally, Stobart Air also operates a number of regional Aer Lingus routes, as well as some BA Cityflyer routes under a wet-lease agreement. As such it’s not difficult to see why the haulage giant would express interest.

Who do you think will purchase Flybe? Let us know in the comments down below!