The Virgin Atlantic-led consortium behind a proposed takeover of Flybe has pumped £10 million into the embattled carrier with immediate effect to “support the business” and “improve liquidity”.
Connect Airways, the consortium comprising Virgin, Stobart Group and Cyrus Capital, has agreed a £10 million bridging loan, with scope for a further £10 million cash injection at a later date.
The move has become necessary after a previous agreement for a £20 million “credit facility”, negotiated as part of its bid for the domestic carrier, fell through, meaning Flybe had been unable to draw funds from the pot.
In a trading update issued on Tuesday morning (January 15), Connect confirmed it had come to a revised agreement with Flybe to acquire the airline’s main trading company Flybe Limited, including Flybe Aviation Services Limited, and digital company Flybe.com for £2.8 million - £600,000 more than the £2.2 million agreed last week.
Connect has said its commitment to providing £80 million funding for Flybe will remain under the new arrangements.
“The board of Flybe and Connect Airways are pleased to announce they have reached agreement on the purchase by Connect Airways of the group’s main trading company Flybe Limited (including Flybe Aviation Services Limited) and the digital company Flybe.com Limited for £2.8 million... and a revised bridge facility of up to £20 million to provide funding to Flybe Limited, of which £10 million will be released today [Tuesday] to support the business.
“In addition, a number of improved agreements with banks have also been reached to improve liquidity.
“Furthermore, the consortium has confirmed to Flybe its plans for the future of the Flybe business, including the combination with Stobart Air, remain as set out in the recommended offer including its commitment to provide £80 million further funding.
“The board of Flybe believes obtaining this revised facility from the consortium provides the security the business needs to continue to trade successfully. This preserves the interests of stakeholders, customers, employees, partners and pension members.”
Connect’s bid was formalised on Friday (January 11) after Virgin was initially linked with Flybe in November last year.
Should the deal go through, Flybe will be rebranded Virgin Atlantic, albeit while operating under a separate UK air operator certificate.
Virgin Atlantic chief executive Shai Weiss said Flybe would provide “greater connectivity” with Virgin’s long-haul network.