A deal worth £2.2m has been reached for a consortium involving Virgin Atlantic and Stobart Group to buy out FlyBe.
Based in Exeter, Flybe carries around eight million passengers a year from airports such as Southampton, Cardiff and Aberdeen, to the UK and Europe.
The deal follows a profits warning issued by FlyBe in October. Along with the acquisition, the consortium has committed to make available a £20m bridge loan facility to “support Flybe’s ongoing working capital and operational requirements”.
In addition, the consortium said it intends to provide up to £80m of further funding to invest in the business.
Shareholders in Flybe will receive 1p a share, well below the 295p at which they were floated in 2010 and the 30p at which they were trading before October’s profits warning.
The combined group will operate under the Virgin Atlantic brand.
Christine Ourmieres-Widener, Flybe’s chief executive, said: “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.”