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Bloomberg
Flybe Group Plc has begun takeover discussions with several parties as the rising cost of oil crimps earnings at Britain’s biggest provider of domestic flights and the company faces increasing financial stress.
The Exeter, England-based carrier is in talks with “a number of strategic operators about a potential sale,†it said in a statement, without naming them. The stock rose the most since 2013.
Airports operator Stobart Group Ltd. dropped plans for a purchase of Flybe in March after failing to agree on terms. Sky News reported earlier that Stobart may have renewed its approach and that turnaround funds may also be interested, citing bankers it didn’t identify. The carrier said there’s no certainty that a bid will be forthcoming. In the meantime, it will carry on with plans to shrink its fleet and move to cheaper turboprop planes in an effort to strengthen its balance sheet and preserve cash.
Flybe said it faces the prospect of companies that process bank-card transactions lifting the required level of collateral. If the group was unable to access sufficient additional liquidity, that could cast significant doubt on its ability to continue as a going concern.
Flybe focusses on cities largely ignored by network and low-cost operators, ranking as Europe’s biggest airline using planes with 100 seats or less. While a valuable market, the smaller aircraft generate lower operating margins.