5th Mar 2020 10:07
(Alliance News) - Aviation, energy, and civil engineering firm Stobart Group Ltd is to write-off GBP50 million due to the collapse of regional airline Flybe, it said Thursday.
Shares in Stobart Group were down 1.6% at 80.70 pence each in London.
Flybe announced in the early hours of Thursday it has ceased trading with immediate effect and that administrators have been appointed. Crisis talks were held throughout Wednesday to try to secure a rescue package, but no deal was agreed.
Flybe was bought in February last year by a consortium called Connect Airways, made up of Virgin Atlantic, Stobart Group and Cyrus Capital, after running into earlier financial problems.
"Stobart Group's initial investment was made up through the sale of Stobart Air and its aircraft leasing business, Propius. As a result, the non-cash balance sheet impact on Stobart Group is GBP43.3 million and the additional GBP7 million investment made in 2020. The value of both these investments will now be written down to nil on its balance sheet," said Stobart.
Stobart added Flybe had shown "promising signs of a turnaround", but the impact of Covid-19 on Flybe's trading means the consortium "can no longer commit to continued financial support".
"As a result of this news, London Southend Airport will see a short-term impact, with Flybe having planned to operate ten routes from the airport from Spring of this year. However, the long-term prospects of that airport remain compelling," said Stobart, which operates the airport in question.
The company added Stobart Air's ongoing ability to trade was not directly impacted by the decision to place Flybe into administration.
By Tapan Panchal; [email protected]
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