Virgin Atlantic Likely To Bail Out Cash-strapped Flybe
Virgin Atlantic has confirmed that it is in discussions with cash strapped airlines firm Flybe and there could be an outright purchase or close alliance between the two. After Exeter based Flybe declared itself bankrupt and open for sale, it was in discussions with several airlines including Virgin. Flybe had warned investors last month that its annual losses for 2018 would be in the range of £ 22 million due to multiple reasons consisting of falling demand, a weak pound and soaring fuel costs. While Flybe confirmed that no offer has been made by Virgin the latter said that since it already has a trading and code-sharing relationship with Flybe it is reviewing options.
Since the shares of Flybe fell down to 50p during March this year they have been continuing the downtrend and fell by nearly three quarters, but after signs of a takeover by Virgin they jumped to 14.3 p. Virgin’s officials said that discussions are on about whether it would be suitable to have a commercial arrangement with Flybe or make an outright offer. According to aviation analyst Andrew Charlton, Virgin is interested in the budget carrier as it will gain greater access to take-off and landing slots at crowded Heathrow airport and other locations in UK.
Virgin would have to wait for buying such landing slots but this purchase would help it to gain outright access to them. Besides this Flybe caters to several regional routes within UK that could be used by Virgin to fly passengers into London and Gatwick airports to connect with its own long-haul route passengers. Flyby started operations in 1979 and presently owns 78 planes that operate out of small airports like Southampton, Cardiff, Belfast City, Aberdeen, London and Norwich carrying passengers across the UK and Europe. Though it has a sizeable customer’s base and ferries nearly eight million every year it has been struggling to cut costs after an expensive IT upgrade of its systems.