Flybe to stay in air as Virgin Atlantic-led group injects cash

The consortium led by Virgin Atlantic and Stobart Group has been forced to rush through an injection of cash into Flybe, after the struggling regional airline failed to mollify banks that were withholding money. Virgin Atlantic, which is still part-owned by billionaire Richard Branson, Stobart and investment house Cyrus announced the GBP2.2m bid for Flybe Friday, under the banner of Connect Airways, a joint venture. Connect also pledged to inject £80m for investment and GBP20m in a loan to keep Flybe’s operations running. However, Connect on Tuesday announced that Flybe had not satisfied its conditions for the loan, prompting a need for an urgent injection of capital. It is understood that Flybe failed to persuade the banks that take card payments on its behalf to pass on the much-needed cash. The banks were withholding the money in case Flybe collapsed and defaulted. The airline had on Friday acknowledged a “rapid and significant tightening on Flybe’s liquidity from the card acquirer market”. Connect will now buy Flybe’s main trading company, Flybe Ltd, and its website company, Flybe.com Ltd, for GBP2.8m. As part of the latest deal, GBP10m of the GBP20m loan will be injected on Tuesday, while “improved agreements” have been reached with Flybe’s banks. Story has further details.<br/>