Flybe: Virgin Atlantic revealed as possible buyer for cash-strapped airline

The Flybe network could be tuned to provide maximum connectivity with Virgin services, particularly at Manchester Airport

Virgin Atlantic has been revealed as a potential buyer for cash-strapped Flybe.

The airline founded by Sir Richard Branson has issued a statement saying: “Virgin Atlantic notes the recent media speculation related to Flybe. Virgin Atlantic has a trading and codeshare relationship and confirms that it is reviewing its options in respect of Flybe, which range from enhanced commercial arrangements to a possible offer for Flybe.

“Virgin Atlantic emphasises that there can be no certainty that an offer will be made nor as to the terms of any offer.”

Last week Flybe announced it was up for sale. The financially troubled British regional airline is expected to lose tens of millions of pounds over the winter, at an average rate calculated by The Independent of £7,000 per hour.

The chief executive, Christine Ourmières-Widener, blamed “a recent softening in growth in the short-haul market” as well as higher fuel and currency costs for the slump.

Both easyJet and Ryanair confirmed that they were not interested in buying Flybe. But now, according to a Sky News report, Virgin Atlantic has opened discussions about a takeover.

Virgin Atlantic was founded in 1984 by Sir Richard Branson, who retains a minority stake in the carrier; Delta Airlines and Air France-KLM own the bulk of shares.

The long-haul airline mainly serves the US, the Caribbean and Asia. It ran a domestic operation called Little Red from 2013 to 2015, connecting Heathrow with Manchester, Edinburgh and Aberdeen, which folded after heavy losses.

Flybe began as Jersey European in 1979, and continues to serve as the main airline between the Channel Islands and Britain.

The regional airline runs a core of mainly north-south routes from Aberdeen, Edinburgh, Glasgow and Belfast City to Manchester, East Midlands, Birmingham, Bristol, Southampton and Exeter. Flybe is also a leading operator at Cardiff, Newquay and Norwich.

It already feeds Virgin Atlantic flights at Gatwick, Heathrow and Manchester, and delivers passengers to Air France-KLM on a range of routes to Paris and Amsterdam.

Immediate synergies with Virgin Atlantic are limited. Flybe operates small Bombardier and Embraer aircraft, while Virgin has only wide-bodied Airbus and Boeing jets.

But the Flybe network could be tuned to provide maximum connectivity with Virgin services, particularly at Manchester – which, unlike Heathrow and Gatwick, has plenty of scope for expansion.

The other serious bidder for Flybe is believed to be the transport firm Stobart Group, which abandoned a previous bid earlier this year.

The market capitalisation of Flybe has dropped to around £20m, and any bid is unlikely to be significantly higher; the buyer will also need to inject tens of millions of pounds to provide liquidity.

One other possible suitor is IAG, the holding company of British Airways, Aer Lingus and Iberia.

Before the Virgin Atlantic bid was revealed, Flybe announced that it has won the right for a four-flight-a-day link between Heathrow and Newquay, using “remedy slots” surrendered by British Airways.