Virgin Atlantic, Stobart Group and Cyrus confirm offer for Flybe – delivering enhanced connectivity
07.00 GMT London: The Boards of Flybe and Connect Airways, a company bringing together Virgin Atlantic Limited, Stobart Group and Cyrus Capital, are pleased to announce that they have reached agreement on the terms of a recommended cash offer for Flybe. Following which Connect Airways will acquire the entire issued, and to be issued, share capital of Flybe. Stobart Group will contribute Stobart Air and Propius, Stobart's aircraft leasing business into Connect Airways.
Concurrently with announcing the Acquisition, Cyrus, Stobart Group and Virgin Atlantic have committed to make available a £20 million bridge loan facility to support Flybe's ongoing working capital and operational requirements.
In addition, following completion of the Acquisition, Cyrus, Stobart Group and Virgin Atlantic are intending to provide up to £80 million of further funding to the Combined Group to invest in its business and support its growth, as well as a contribution of Stobart Air.
Flybe will continue to serve customers and communities across the UK and Ireland. In due course Flybe will be rebranded to Virgin Atlantic.
The Combined Group will offer significant benefits for customers:
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Deliver more choice to customers by linking UK regions and Ireland to Virgin Atlantic's extensive long-haul network through improved connectivity at Manchester Airport and London Heathrow
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Provide a strong foundation to secure the long-term future of Flybe, its customers and its people by leveraging the combined commercial, operational and functional expertise and scale of Virgin Atlantic and Stobart Group
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Utilise the strength of the Virgin Atlantic brand, and the offer of an enhanced customer experience in keeping with Virgin Atlantic's heritage
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Provide the Combined Group with an enhanced presence at Manchester Airport , London Heathrow Airport, with the potential to grow further in London Southend Airport
The Combined Group intends for Flybe to continue as an independent operating carrier with a separate UK Air Operator Certificate (AOC) under the Virgin Atlantic brand. Stobart Air is intended to continue under a separate Irish AOC.
The Combined Group will operate independently to Virgin Atlantic under one management team, owned 40% by Cyrus Capital Partners, 30% by Stobart Aviation, a wholly owned subsidiary of Stobart Group, and 30% by Virgin Atlantic Limited, the holding company of Virgin Atlantic Airways and Virgin Holidays.
Christine Ourmieres-Widener, Flybe's CEO said:
"Flybe plays a vital role in the UK's transport infrastructure with a UK regional network which uniquely positions it to benefit from growing demands from long haul carriers for passenger feeder traffic. We have successfully implemented a clear strategy in recent years focused on tighter fleet
management, improving revenue per seat and increasing load factors. The pursuit of operational excellence has reduced maintenance times and increased efficiencies and customer satisfaction.
"However, the industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit. We have been affected by all of these factors which has put pressure on short-term financial performance. At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.
"By combining to form a larger, stronger, group, we will be better placed to withstand these pressures. We aim to provide an even better service to our customers and secure the future for our people."
Shai Weiss, CEO of Virgin Atlantic said:
"The Virgin Atlantic brand is built on the foundation of putting customers at the heart of everything we do, providing them with the choice they deserve and a travel experience they love. All possible because of our amazing people.
"We are pleased to have this opportunity to partner with Stobart Group and Cyrus Capital to bring Virgin Atlantic service excellence to Flybe's customers. Together, we can provide greater connectivity to our extensive long haul network and that of our joint venture partners Delta Air Lines, at Manchester Airport and London Heathrow. In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM."
Warwick Brady, CEO of Stobart Group said:
"The Board of Stobart Group believes that bringing Stobart Air together with Flybe and partnering with Virgin Atlantic and Cyrus Capital is the best way for us to play an active role in regional airline consolidation.
"The combined entity will be a powerful combination with sufficient scale to compete effectively in the UK and European airline markets. It will allow us to continue to work with Flybe and provides an excellent opportunity to continue to grow passenger numbers at London Southend Airport."
Lucien Farrell, Partner of Cyrus said:
"We are delighted to be working once again with the Virgin Group following our successful partnership in the launch and eventual sale of Virgin America to Alaska Airlines. We believe Flybe's strong market position and high quality management together with Virgin Atlantic's dedication to the best customer experience and Stobart Group's expertise in regional flying will produce a world- class airline."
ENDS
For more information contact: Virgin Atlantic Press.office@fly.virgin.com
Connect Airways Limited
John Waples, FTI Consulting LLP Edward Bridges, FTI Consulting LLP
Notes to Editors:
About Flybe
Flybe is Europe's largest regional airline and flies more UK domestic flights than any other airline: 53% of all UK flights within mainland Britain (excluding London). Flybe currently operates 192 routes serving 14 countries from 75 departure points in the UK and Europe (flown under the Flybe brand including all routes on sale November 2018 - August 2019) and is the largest scheduled airline by air traffic movements at Aberdeen, Belfast City, Birmingham, Cardiff, Doncaster, Sheffield, Exeter, Glasgow, Isle of Man, Jersey, Manchester, Newquay and Southampton airports. Flybe operates a fleet of 76 aircraft and was recognised as the most punctual UK-based airline in the latest report on 'Best and Worst Airlines' issued by leading consumer watchdog Which? in January 2018.
As well as its scheduled passenger regional airline services, charter and cargo transport services and white-label flying for third party airlines, Flybe's training academy provides pilot, crew, engineering and other training services in-house and to third parties and Flybe Aviation Services owns a maintenance, repair and overhaul facility servicing both internal and third party customers.
About Virgin Atlantic
Virgin Atlantic was founded by entrepreneur Sir Richard Branson 34 years ago with innovation and customer service at its core. Today Virgin Atlantic carries 5.5 million customers annually, and was recently named the UK's favourite long haul carrier by Skytrax, Best Transatlantic Airline at the British Travel Awards 2017 and one of the Top 5 Airlines in the World by Airline Ratings. Headquartered in London, Virgin Atlantic employs over 10,000 people worldwide and operates a fleet of 45 aircraft serving 24 destinations across four continents. Alongside joint venture partner Delta Air Lines they operate a leading transatlantic network - offering up to 38 flights per day between the UK and US with onward connections to over 200 US and international cities. In 2019 Virgin Atlantic will take delivery of their first Airbus A350-1000 aircraft - helping to transform the fleet into one of the quietest and most fuel efficient in the sky.
On May 15, 2018 Air France-KLM, Delta Air Lines and Virgin Atlantic Limited signed definitive agreements to combine the existing trans-Atlantic joint ventures. This transaction is in the process of regulatory clearance. Upon completion the airlines' expanded joint venture will become the preferred choice for customers travelling across the Atlantic offering the most comprehensive route network, convenient flight schedules, competitive fares and reciprocal frequent flyer benefits, including the ability to earn and redeem miles across all carriers. Customers will also benefit from the co-location of facilities at key hub airports to improve connectivity and access to each carrier's airport lounges for premium passengers.
For more information visit: www.virginatlantic.com or www.virginholidays.co.uk or via twitter @virginatlantic @virginholidays
About Stobart Group
Stobart Group is listed on the London Stock Exchange under code STOB. It is focused on delivering growth in its Aviation and Energy divisions. Stobart Group also holds a portfolio of infrastructure assets and investments, and aims to add value to this portfolio, selling when appropriate.
Stobart Group's Aviation Division invests in, develops and operates a number of aviation-related businesses focused on meeting the growing demand for airport capacity and improved customer
experience. The Aviation Division comprises London Southend Airport and the Stobart Jet Centre, Stobart Aviation Services, Stobart Air and an aircraft leasing business, Propius. For more information visit: www.stobartgroup.co.uk or via twitter @stobartgroup
About Cyrus
Cyrus was founded in 1999 and has offices in New York and London, managing over $4.4bn on a global basis in securities and loans issued by corporates and sovereigns. Its client base is predominantly endowments, foundations and family offices with a significant portion of the assets under management being partner and employee capital.
About Connect Airways
Connect Airways is an English limited company the share capital of which is owned 30% by Virgin Atlantic, 30% by Stobart Aviation, a wholly-owned subsidiary of Stobart Group and 40% by DLP Holdings, a company wholly-owned by funds managed by Cyrus.
It is also expected that Connect Airways will acquire, immediately prior to completion of the Acquisition, Stobart Air's wet lease operations and aircraft leasing business. The Combined Group is expected to bring benefits to customers, suppliers and employees, providing stability in an extremely tough trading environment.
The ownership of entities in the Connect Airways Group will be structured in a manner which ensures compliance with applicable European and UK aviation regulations with respect to ownership and effective control of Stobart Air (which holds an air operator certificate issued by the government of the Republic of Ireland) and Flybe (which holds an air operator certificate issued by the government of the United Kingdom).