Wednesday, 5 December 2018

Is the Flybe future about to unfold?

The future of the troubled UK regional carrier Flybe could be decided in the not too distant future, we've been told by a staff member that an announcement on a deal is imminent. Yet, exactly who is coming to the rescue of the financially ailing airline?

Virgin Atlantic confirmed on Friday, November 23rd, that it was in talks with Flybe, “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.” was the statement at the time and nothing much has changed, indeed when approached yesterday the Virgin press office told us "Our position on Flybe remains the same."

As time moves on, industry advisers in Crawley inform us that it's less and less likely that Virgin will take over the company as a whole. Although Virgin has had experience of running domestic routes in the UK, it's own Little Red ran from April 2013 to September 2015, yet with loads of little over 37% it wasn't what you might call an unqualified success. It is therefore perhaps unlikely that Virgin, majority owned by US carrier Delta, would be interested in taking over Flybe. The only thing that might warrant a bid is the highly valuable and highly prized London Heathrow landing and take off slots that Flybe has!

Stobart Air is another airline that we've been told have held, at least, preliminary talks with Flybe over a possible merger. Stobart Air is one of Europe’s leading franchise, ACMI and charter aviation specialists, every week it operates some 940 flights over more than 43 routes in 11 European countries with partners Aer Lingus and Flybe. However, the signs that Stobart is to be the saviour of Flybe dimmed dramatically when a spokesperson at Stobart Air told us, “It is business as usual for Stobart Air. The airline currently operates nine routes from London Southend Airport under our Flybe franchise agreement. This will reduce to five for the summer 2019 schedule including the new London Southend Airport- Newquay Cornwall route.”

Another airline said by some in the industry to be in the running for a complete buyout of Flybe is the Humberside (HUY) based Eastern Airways, that flies a mixed fleet including 2 ATR72-600s, 8 BAe Jetstream 41s, some Embraer jets and Saab 2000 turboprops on many regional UK routes. Its operation and route network would greatly compliment that of Flybe and together they would truly have the biggest domestic UK route network. Eastern Airways remains tightlipped over possible talks, not responding to our requests for comment. However, it is understood that parent company, the Bristow Group has made funds available for a potential purchase. 

Aviation media speculation indicated that Hungarian low-cost carrier Wizz Air had been in negotiations with Flybe over a rescue package funnelled through its UK subsidiary. Wizz Air UK currently operates 8 UK registered aircraft from its London Luton Airport (LTN) base. Whilst Wizz is keen to take a larger slice of the UK aviation market, Flybe's route structure and mixed aircraft fleet is at odds with the larger single type operation Wizz Air currently deploys. When I broached the possibility of Wizz Air whizzing in for a stealthy deal with a contact based in Jersey, my ears were filled with a guffaw of unnatural length. 

When asked for a comment on the current state of negotiations and the speculation that a deal was imminent, a rather terse "Flybe doesn’t comment on these matters." was all we were given, which doesn't clarify the muddy waters. The firm has however been rather busy scrubbing around for various sources of financing in the last two weeks which has included getting another loan or mortgage on one of its Bombardier Q400 turboprop aircraft - G-JEDW that netted £5 million ($6.35million). The sale of a hanger at Exeter Airport (EXT), which Flybe will now lease back raised a further £5 million of much-needed funds. The company is also in dispute with Monarch Aircraft Engineering for maintenance contracts at Birmingham and Manchester, which may save the carrier some cash, although it will have to do all the maintenance itself, which might negate any cost savings.  

There is also speculation among some in the industry, that no buyer will be found in time to rescue the carrier as a going concern, leaving it no option other than to call in the administrators. Then, we're told, the interested parties will strike, pick the bones of Flybe at bargain rock bottom prices. I feel however, Flybe is a much more valuable asset up and running as it is currently, but for how long that will last, is not at all certain.  







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