UK's Stobart invests $12 million in rescue of airline Flybe

This post was originally published on this site
© Reuters. FILE PHOTO: A Flybe plane takes off from Manchester Airport in Manchester, Britain© Reuters. FILE PHOTO: A Flybe plane takes off from Manchester Airport in Manchester, Britain

(Reuters) – Britain’s Stobart Group (L:) will provide 9 million pounds ($11.8 million) in funding for Flybe as part of this week’s government-backed rescue of the regional airline, the infrastructure group said on Thursday.

Stobart said it had already invested 45 million pounds in Connect Airways, a consortium comprising the London-listed company, Cyrus Capital and Richard Branson’s Virgin Atlantic, which acquired the assets of Flybe last year.

Stobart holds less than a one-third shareholding in the consortium, which has to date provided 110 million pounds in funds to Connect Airways.

Flybe was rescued on Tuesday after the British government promised to review taxation of the industry and shareholders pledged more money to prevent its collapse. The agreement came a day after reports suggested it needed to raise new funds to survive through its quieter winter months.

As part of the plan, the government promised to review air passenger duty, a tax on flights departing from UK airports.

Stobart, which is now separate from the Eddie Stobart (L:) haulage business, said delays in getting regulatory clearance for the consortium’s plans to buy Flybe’s assets, coupled with a number of other factors including legacy issues, had affected its turnaround plan for the airline.

“This resulted in a situation in which a further injection of funds is required to ensure continued flying,” Stobart said in a statement.

Roughly a year ago, Flybe was also approached by Stobart’s former CEO Andrew Tinkler about an alternative financing proposal that challenged Connect’s deal.

Flybe carries eight million passengers a year between 71 airports across the UK and Europe, according to its website.

Since the rescue deal, details of which were not disclosed, British Airways owner IAG (L:) has filed a complaint with European Union regulators, calling it a “blatant misuse of public funds”.

Virgin Atlantic and Cyrus Capital did not immediately respond to a Reuters request for a comment on Thursday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment