16th Jan 2020 11:57
(Alliance News) - Stobart Group Ltd on Thursday said it will boost its investment in its part-owned UK carrier Flybe, which staved off collapse earlier this week.
Stobart said it is could invest an extra GBP9 million in Connect Airways, the joint-venture party which owns Flybe.
Stobart explained: "The Connect Airways consortium has committed to providing Flybe further short-term funding with Stobart Group contributing up to GBP9 million of capital, with the funds drawn down only if required."
Stobart has a 30% stake in Connect Airways with Virgin Atlantic also holding a 30% and investment adviser Cyrus Capital Partners has a 40% interest.
Flybe, which earlier this week was on the verge of collapse, received a reprieve late Tuesday, after the UK government told the airline it would review air passenger duty and shareholders agreed to inject additional investment.
Air passenger duty is a levy imposed on passenger flights from the UK.
The Connect joint-venture was established to buy Flybe, which put itself up for sale in November 2018 after rising fuel costs and currency headwinds continued to hinder its performance.
Although the trio of firms agreed to buy Flybe in January 2019, the deal did not receive European Commission clearance until July.
Stobart said on Thursday: "The delay in receiving control, coupled with a number of other factors including legacy issues, impacted on the delivery of the consortium's turnaround plan for Flybe. This resulted in a situation in which a further injection of funds is required to ensure continued flying."
Stobart said that to date, the joint-venture has provided GBP110 million of investment in Flybe. Stobart said that it alone has provided a total of GBP45 million of funds.
"The Connect Airways consortium has worked tirelessly alongside Flybe and the UK Government to look for solutions to ensure the financial viability of the airline so that consumers can continue to have confidence in flying with Flybe," Stobart added.
Shares in Stobart were 0.9% higher at 111.21 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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