Sale of Flybe 1p a share an insult to the industry

Flybe the UK regional airline’s sale for 1p a share to Three-group consortium and will be called Connect Airways, was “an insult to the aviation industry” according to Andrew Tinkler, the company’s second-biggest investor who bought a 12 per cent stake in Flybe in January.

Mr Tinkler said Flybe’s problem was cash flow rather than underlying poor performance as the airline has been struggling with the cash flow as its credit card requirements, withholding cash as collateral in case the airline found itself unable to pay. At the end of September 2018, the airline had £16.4, in restricted cash – up£81.m from six months earlier –which included amounts held back for card acquirers. Flybe’s pretax profit fell 54 per cent to £7.4m in the first six months of the fiscal year to the end of September compared to prior year. Revenue fell 2.4 per cent  to £ 409.2m and net debt grew over 40 per cent to £82.1m.

On Friday Mr Tinkle lost a case in the High Court against Stobart whose chairman Ian Ferguson he had tried to oust last summer.

A spokesman for Hosking Partners which owned 19 per cent of the airline said accepting the offer made by three-group consortium has been “very cavalier with people’s investments. The impact on smaller investor was considerable, how we’ve moved from a position of value with assets to a position of no value and no assets.”

Flybe said: “Throughout the whole process we have focused on delivering the best outcome for shareholders in a very difficult and demanding situation. We understand the 1p-share offer has been very disappointing outcome for shareholders and this was not a decision we took lightly,  but was necessary to discharge our obligations in the interest of all relevant stakeholders .”

Flybe’s board today rejected a last minute takeover deal from a South African Hedge fund Bateleur Capital and Messa Airlines, a regional US airline backed by Flybe’s second largest shareholder Andrew Tinkler, offered to make a £65m capital injection with 4.5p a share, and said it was sticking with an offer from Connect Airways,a group made up of Richard Branson’s Virgin Atlantic, Stobart Air and venture capitalist Cyrus which had vowed to put in £100million.

The Branson team’s offer values Flybe at £2.2m gives it Flybe’s 76 planes and slots at Heathrow and Sorbet‘s Southend airport.

Shares in Flybe doubled this sessionho 1.8p at 3.1p giving a market cap of £6.5m but lot lower from its £215m valuation in 2010.