Airport looks to new airlines as Flybe flounders

Thursday 31 January 2019

Ports of Jersey are in talks with other airlines that could run Flybe routes, as the financially troubled airline fights attempts to scupper a rescue deal.

Earlier this month it was announced that Virgin Atlantic, Stobart Group and private equity firm Cyrus Capital intended to set up a new aviation group to rescue Flybe from financial woes induced by Brexit uncertainty, rising fuel prices and general difficulties across the aviation sector.

But the consortium’s £2.2million offer for the airline, which provides vital lines from Jersey to Southampton and Exeter, has led to serious unrest among shareholders and a legal attempt to block the deal, leaving a question mark whether it will go ahead at all.

Pictured: If the Flybe deal is scuppered, Jersey could face losing lifeline routes to the South of England.

If it fails, the airline could be forced to withdraw its services altogether and enter administration.

Ports of Jersey officials now say they’re making contingency plans to avoid serious disruption to travel from the island should the airline cease to operate its lifeline routes, which include Southampton and university town Exeter.

This has included talks with other airlines who may be able to take them on.

A Ports spokesperson told Express: “To date, Ports of Jersey has received no formal notification of any withdrawal of Flybe services and we remain optimistic that the airline’s Jersey route network, which has proved very successful, would continue under new ownership.

“However, our Route Development Team at Ports of Jersey is already in discussion with other airlines that could operate these services in the event of a withdrawal by Flybe or a new owner.”

Pictured: Flybe's turmoil raises questions about its franchise agreement with Blue Islands.

The news had also raised questions over the fate of Blue Islands, who have operated a franchise deal with Flybe since 2016. Although the agreement sees the pair share booking infrastructure and use Flybe branded uniform and planes, the provider pledged that its services won't be hit in the event of Flybe's failure.

A spokesperson said: "Blue Islands is a financially independent, locally owned airline with full control of its scheduling, routes, frequency, fares and timings for all its flights. Blue Islands currently markets its services as a Flybe franchise partner utilising the Flybe brand and sales channels. Blue Islands could market its scheduled services independently should it be necessary to do so.

"For the time being, we continue to work with the team at Flybe Limited in respect of our current franchise agreement. Of course changes are likely, the details of which will become clear in the fullness of time. In the meantime, our team at Blue Islands is focusing on the two exciting new route launches, Guernsey - London Southend and Guernsey – Liverpool (as announced last week). We trust that this sufficiently reassures our consumers that Blue Islands Limited remains an independent, locally owned and operated private business, committed to its role in the Islands. Customers can continue to book all of our Blue Islands operated services at Flybe.com."

The crux of the current shareholder turmoil is linked with share prices.

After the Virgin-Stobart-Cyrus consortium offer was announced, shareholders learned that each share they held – previously around 16p – would nosedive to a value of just 1p if the sale went ahead.

Outraged, the airline’s largest shareholder – hedge fund tycoon Jeremy Hosking – threatened to block the rescue deal in a court injunction.

Pictured: Share prices could plummet to 1p under the £2.2million sale.

Explaining the move in a letter to directors, the owner of 19% of Flybe reportedly expressed concerns that the handling of the deal could have lead to better rival offers being blocked.

As well as calling for the cut-price sale to be investigated, Mr Hosking also pushed for Flybe Chairman Simon Laffin to be ousted.

The airline then confirmed this week that they had been sent an application for Eric Kohn, a veteran of the aviation industry, to replace Mr Laffin. He said that shareholders with 40% of Flybe’s stock backed the idea.

But yesterday Flybe hit back, arguing that Hosking Partners – owned by Mr Hosking – had made an error in his paperwork.

In a statement sent to shareholders, the company said: "The documentation as received is not a valid request… because such a request must be made by a member of the company [Flybe]. Flybe has therefore invited Hosking to procure that a valid request… is submitted.”

A spokesperson for Hosking then responded: “"It is a question for FlyBe as to why their only communication confines itself to procedural and legal details rather than the substance of how so much value has been transferred to the… consortium so rapidly without shareholder approval."

Flybe also knocked back the request for Eric Kohn to be appointed.

Share value is currently around 4p – a mere quarter of its previous value.