Stobart Group Ltd (LON:STOB) has completed the sale of its regional airline to Connect Airways – the joint venture it set up with Virgin Atlantic which has also finalised the £2.8mln acquisition of Flybe Group PLC’s (LON:FLYB) main trading assets.
Connect, which also includes New York-based hedge fund Cyrus Capital, has paid £40mln to acquire Stobart Air, as well as Propius – Stobart’s aircraft leasing business.
“The combination of Stobart Air and Propius with Connect Airways is expected to bring benefits to customers, suppliers and employees, providing stability in a tough trading environment,” read Stobart’s statement on Friday morning.
With Flybe Limited and Flybe.com Limited now also on board, Connect has completed what it initially set out to, despite some protests from certain Flybe shareholders.
It plans to use the Virgin Atlantic brand to operate a network of regional flights provided by both Flybe and Stobart Air.
Last month, Stobart, Virgin and Cyrus announced they were setting up a domestic airline called Connect Airways.
Cyrus is the lead partner with a 40% stake, and the US hedge fund is also taking a 4.65% interest in Stobart after agreeing to invest £24.7mln. Stobart and Virgin will each have a 30% interest.
Flybe now a cash shell
As part of the initial formation, Stobart agreed to sell its airline and leasing businesses to Connect, which next launched a cut-price £2.2mln bid for Flybe, an offer which was recommended by the cash-strapped carrier’s board.
They also agreed to pump in up to £100mln of fresh cash into their new venture.
The following week, Connect confirmed it had agreed to buy Flybe’s main trading assets – comprising Flybe Limited and Flybe.com Limited – for £2.8mln.
Investors are yet to vote on the original 1p-a-share takeover offer, but the sale of the assets didn’t require shareholder approval.