Virgin Atlantic in talks over possible takeover of Flybe

Regional airline’s Manchester and Heathrow operations could prove profitable for Virgin

Virgin Atlantic has confirmed it is in talks over a possible takeover of the struggling regional airline Flybe, which put itself up for sale last week.

The long-haul airline founded by Sir Richard Branson is thought to see potential in feeding more Flybe traffic into its Manchester and Heathrow operations.

Shares in the Exeter-based Flybe, which had lost 80% of their remaining value in the last two months, surged more than 50% from 9.7p to 14.8p on Friday on the news.

However, Virgin said its options could simply be enhanced commercial arrangements with Flybe, which already feeds in some passengers to its international flights, with codeshares on certain routes.

Virgin’s last venture into domestic operations, the Little Red airline launched in 2013 linking London, Manchester and Scotland, proved shortlived, abandoned in 2015 after most services flew half-full.

Flybe said on Friday that Virgin was “one of the parties it is in discussions with as part of the formal sale process announced on 14 November”.

No other airline has yet confirmed an interest, while Ryanair explicitly ruled itself out of any bid earlier this week. Stobart Group had considered a former offer earlier this year, but its bid was rejected by Flybe.

A Virgin spokesperson said: “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.”

While Flybe has been largely loss-making, despite widespread cost-cutting and job losses in successive turnaround plans, its operations at Heathrow and Manchester could prove profitable for Virgin, possibly tweaking schedules to direct more passengers into its transatlantic flights.

Analysts said some of its slots at Heathrow could also be turned into any short-haul European services Virgin might wish to develop, although some – such as the Newquay route announced on Thursday by the government – have a public service obligation.

The Flybe turboprops, with fewer seats to fill, could prove more cost-efficient than the Little Red A320s Virgin abandoned, while landing charges at Heathrow have been cut dramatically for domestic flights.

Flybe confirmed it was putting itself up for sale a month after a profits warning sent its ailing stock market valuation into a nosedive.


Gwyn Topham Transport correspondent

The GuardianTramp

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