VS looking at Flybe...?
Nov 22, 2018, 11:35 am
#1
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VS looking at Flybe...?
Sky news just reported that Virgin Atlantic are in talks to take over Flybe, who put themselves up for sale last week...
Not sure whether it's ok to post a link - apologies if not! - but there's a little more background at on their website .
Not sure whether it's ok to post a link - apologies if not! - but there's a little more background at on their website .
Nov 22, 2018, 1:49 pm
#2
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Yes more than ok to post a link. What is bad form is to just post a link with no explanation and expect people to click through.
interreting thought and it did cross my mind when a Flybe sale was first mooted.
VS may well consider it but remember they got burned with Little Red but maybe with Flybe’s wider route network it would be a whole new ball game with the possibility of more feeder traffic from the regions if they can get slots at LHR and LGW.
But a quick look at the route map shows that it might not have the network to feed traffic to LHR and LGW to help fill up the long haul routes. Their two LHR routes are EDI and ABZ which worked so well for Little Red.
interreting thought and it did cross my mind when a Flybe sale was first mooted.
VS may well consider it but remember they got burned with Little Red but maybe with Flybe’s wider route network it would be a whole new ball game with the possibility of more feeder traffic from the regions if they can get slots at LHR and LGW.
But a quick look at the route map shows that it might not have the network to feed traffic to LHR and LGW to help fill up the long haul routes. Their two LHR routes are EDI and ABZ which worked so well for Little Red.
Nov 22, 2018, 2:37 pm
#3
Join Date: Aug 2018
Posts: 242
Yes more than ok to post a link. What is bad form is to just post a link with no explanation and expect people to click through.
interreting thought and it did cross my mind when a Flybe sale was first mooted.
VS may well consider it but remember they got burned with Little Red but maybe with Flybe’s wider route network it would be a whole new ball game with the possibility of more feeder traffic from the regions if they can get slots at LHR and LGW.
But a quick look at the route map shows that it might not have the network to feed traffic to LHR and LGW to help fill up the long haul routes. Their two LHR routes are EDI and ABZ which worked so well for Little Red.
interreting thought and it did cross my mind when a Flybe sale was first mooted.
VS may well consider it but remember they got burned with Little Red but maybe with Flybe’s wider route network it would be a whole new ball game with the possibility of more feeder traffic from the regions if they can get slots at LHR and LGW.
But a quick look at the route map shows that it might not have the network to feed traffic to LHR and LGW to help fill up the long haul routes. Their two LHR routes are EDI and ABZ which worked so well for Little Red.
Nov 22, 2018, 8:16 pm
#4
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Recent M&A in UK aviation has shown that most of the value comes from LHR (and to a lesser extent LGW) slots. Can't really see VS convincing DL and AF to pay up for a regional UK carrier with Brexit looming.
Nov 23, 2018, 1:40 am
#5
Join Date: Aug 2018
Posts: 242
It depends on the price. Most of the value for an airline like BA comes from landing slots, because that is the limit on their capacity - BA already fly all over Europe and the UK from London.
Virgin largely only fly from London to the US with a few exceptions - and while the AF/KLM tie up will add routes unto Europe these are primarily just from London to Paris/Amsterdam before you add in more connections, and as has been mentioned above, Flybe provide a feeder service for Virgin into Manchester etc. and for AF into Paris (and I think Amsterdam) from regional airports too - while KLM City also cover one or two of these airports, like Southampton, AF don't fly these routes themselves for the most part, and the route cover more parts of France than would otherwise be linked. As someone who lives outside of London it's easier and quicker to use these regional feeders than it is to get to London in the first place (nevermind that if you're in Cornwall it's is far far quicker to fly than to drive to take the train).
I'm not saying I think this represents massive value, but FlyBe aren't in a terrible financial position, they're not in imminent danger of collapse, but they do need investment. And it may be that for the limited cost - I've heard Ł20m suggested - there are enough benefits not just for VS but for their new partners too. And FlyBe do have some London landing slots too even if the regional routes don't work out.
I don't think it's a no-brainer or anything, and I wouldn't think it was a good idea, at say, Ł80m, but if that Ł20m valuation held, it's a fraction of the cost of VS' cheapest aircraft, and it would be worth seeing if the new management can get some value out of it.
Virgin largely only fly from London to the US with a few exceptions - and while the AF/KLM tie up will add routes unto Europe these are primarily just from London to Paris/Amsterdam before you add in more connections, and as has been mentioned above, Flybe provide a feeder service for Virgin into Manchester etc. and for AF into Paris (and I think Amsterdam) from regional airports too - while KLM City also cover one or two of these airports, like Southampton, AF don't fly these routes themselves for the most part, and the route cover more parts of France than would otherwise be linked. As someone who lives outside of London it's easier and quicker to use these regional feeders than it is to get to London in the first place (nevermind that if you're in Cornwall it's is far far quicker to fly than to drive to take the train).
I'm not saying I think this represents massive value, but FlyBe aren't in a terrible financial position, they're not in imminent danger of collapse, but they do need investment. And it may be that for the limited cost - I've heard Ł20m suggested - there are enough benefits not just for VS but for their new partners too. And FlyBe do have some London landing slots too even if the regional routes don't work out.
I don't think it's a no-brainer or anything, and I wouldn't think it was a good idea, at say, Ł80m, but if that Ł20m valuation held, it's a fraction of the cost of VS' cheapest aircraft, and it would be worth seeing if the new management can get some value out of it.
Jan 10, 2019, 2:40 pm
#6
Join Date: Jul 2017
Location: Yorkshire, UK
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Looks like the talks between VS and BE are hotting up
https://news.sky.com/story/virgin-an...-deal-11604069
Quite an interesting development really. I wonder if VS are planning on growing routes from MAN and using BE as feeder flights?
https://news.sky.com/story/virgin-an...-deal-11604069
Quite an interesting development really. I wonder if VS are planning on growing routes from MAN and using BE as feeder flights?
Jan 11, 2019, 6:19 am
#9
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Confirmed earlier today, will be combined with Stobart under the Virgin Atlantic brand:
https://www.bloomberg.com/news/artic...ked-by-stobart
...at least for those of us relying on the routes out of NQY, the ‘Atlantic’ bit seems fair enough.
https://www.bloomberg.com/news/artic...ked-by-stobart
...at least for those of us relying on the routes out of NQY, the ‘Atlantic’ bit seems fair enough.
Jan 12, 2019, 7:03 pm
#10
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Seems like it is also an interesting way for VS' shareholder Delta to be able to manage variations in CR9/CR7 inventory/need on the North American side. Delta owns many of the planes its regional partners actually fly, and I can see a scenario where MAN or some other destination becomes a CR9/CR7 focus city in the way that Delta has expanded in a focus city such as RDU.
Feb 12, 2019, 6:48 pm
#11
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I was reading about this proposed merger, and it seems very interesting.
I flew Flybe once, between Belfast George Best (Belfast City) (BHD) and Birmingham (BHX). Other than it taking about 30 minutes to get through security at BHD, it was a good trip and Flybe appeared to be operationally proficient; clean airplane, punctual, nice flight crew, quick baggage service.
I travel the UK by train at least once a year, and BHX is an excellent interchange between airplane and train. It made me wonder why there isn't more TATL traffic at BHX. Having a solid regional feeder airline could help the Delta/VS JV develop routes at UK airports other than LHR and MAN. I noticed that one airport that the prospective new owners of Flybe indicated they want to develop is Southend, in Essex east of London.
I flew Flybe once, between Belfast George Best (Belfast City) (BHD) and Birmingham (BHX). Other than it taking about 30 minutes to get through security at BHD, it was a good trip and Flybe appeared to be operationally proficient; clean airplane, punctual, nice flight crew, quick baggage service.
I travel the UK by train at least once a year, and BHX is an excellent interchange between airplane and train. It made me wonder why there isn't more TATL traffic at BHX. Having a solid regional feeder airline could help the Delta/VS JV develop routes at UK airports other than LHR and MAN. I noticed that one airport that the prospective new owners of Flybe indicated they want to develop is Southend, in Essex east of London.
Feb 13, 2019, 2:25 am
#12
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BHX suffers from overlapping catchment areas with the London airports and MAN. For TATL, BHX has struggled in the past to maintain TATL flights.
Also, the London airports and MAN also have excellent interchange between plane and train, so no particular advantage their either.
Also, the London airports and MAN also have excellent interchange between plane and train, so no particular advantage their either.
Feb 13, 2019, 4:10 am
#13
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The most recent developments have raised significant ethical questions of Flybe management behaviour regarding the sale. Yesterday it was reported the directors will wind up the company if the sale does not go through http://bigtimesnews.com/2019/02/12/flybe-directors-to-wind-up-company-if-deal-fails-or-shareholders-reject-sale/. Is this blackmail?
1. The Board of Flybe switched their London Stock Exchange listing from premium to Standard. What that means is the Board now does not need to go to Shareholders for approval for sales of significant assets. Connect Air would now be buying the trading assets of Flybe rather than the whole company. This leaves Flybe shareholders with a worthless shell.
2. The price was set at 1p which was significantly lower than the market price on the previous day of 16p. So now there are accusations of creating a false market in that the Directors were covering things up.
3. Hoskings Partners, with a 19% share, has now initiated the first steps to a legal challenge.Things are probably very interesting in the background, and if any legal challenge goes forward might force the bidders to postpone or withdraw the deal. After all the CEO and CFO of Flybe were to transfer the ‘Newco’.
But make no mistake, Flybe has been mismanaged. The stupid lease costs on the Embraer E190s one example of the drip-drip in Pounds out the door. From an initial listing of value of GBŁ240 Million in 10 years to not much more than the equivalent amount in Vietnamese Dong during a Bull Market says it all.
And I still need a flight from London to Cornwall when I go to the UK!
1. The Board of Flybe switched their London Stock Exchange listing from premium to Standard. What that means is the Board now does not need to go to Shareholders for approval for sales of significant assets. Connect Air would now be buying the trading assets of Flybe rather than the whole company. This leaves Flybe shareholders with a worthless shell.
2. The price was set at 1p which was significantly lower than the market price on the previous day of 16p. So now there are accusations of creating a false market in that the Directors were covering things up.
3. Hoskings Partners, with a 19% share, has now initiated the first steps to a legal challenge.Things are probably very interesting in the background, and if any legal challenge goes forward might force the bidders to postpone or withdraw the deal. After all the CEO and CFO of Flybe were to transfer the ‘Newco’.
But make no mistake, Flybe has been mismanaged. The stupid lease costs on the Embraer E190s one example of the drip-drip in Pounds out the door. From an initial listing of value of GBŁ240 Million in 10 years to not much more than the equivalent amount in Vietnamese Dong during a Bull Market says it all.
And I still need a flight from London to Cornwall when I go to the UK!
Feb 13, 2019, 4:41 am
#14
Join Date: Aug 2018
Posts: 242
It's worth mentioning that the shareholders approved the listing change in order to allow the directors to sell off assets, which is what they're doing by selling up.
The actual sale of assets is pretty much finalised I believe, so all we're talking about now is the fate of the holding company .
Despite the allegations, which don't come from 6am unbiased source, it must be said, I don't think tne directors are acting unethically. They have multiple responsibilities and the likelihood is if they were to reopen the bidding process it could disrupt the current offer and no further offers could come forward. Then everyone ends up out if a job and the shareholders get nothing.
A low offer that is confirmed and money forthcoming is worth a lot more than a theoretical higher bid, especially when faced with insolvency. - As an example look at Barclays purchasing Lehman Bros including their NYC headquarters for less than even the value of the building.
The actual sale of assets is pretty much finalised I believe, so all we're talking about now is the fate of the holding company .
Despite the allegations, which don't come from 6am unbiased source, it must be said, I don't think tne directors are acting unethically. They have multiple responsibilities and the likelihood is if they were to reopen the bidding process it could disrupt the current offer and no further offers could come forward. Then everyone ends up out if a job and the shareholders get nothing.
A low offer that is confirmed and money forthcoming is worth a lot more than a theoretical higher bid, especially when faced with insolvency. - As an example look at Barclays purchasing Lehman Bros including their NYC headquarters for less than even the value of the building.
Feb 13, 2019, 7:25 pm
#15
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Can't comment on the Lehman Brothers deals, I was involved in the wind up, which is still going on as not all the trades have been unwound. I believe latest date is around 2030!
Sorry, back to Flybe, am only commenting as an observer. I do think that some of the management decisions need to be questioned, even if there are good answers. The agreed sale at 1p against the previous days 16p just seems very odd.
The shareholders are basically screwed either way, though if the company is in that bad a shape, then it is moot.
What is telling is that as far as I am aware there have been no statements from the LSE regarding the deals.
Sorry, back to Flybe, am only commenting as an observer. I do think that some of the management decisions need to be questioned, even if there are good answers. The agreed sale at 1p against the previous days 16p just seems very odd.
The shareholders are basically screwed either way, though if the company is in that bad a shape, then it is moot.
What is telling is that as far as I am aware there have been no statements from the LSE regarding the deals.