Flybe-9

[southside bobby]

Anyways...

Sky reports MrT has "swooped" to buy 10% of Flybe in an "audacious" market raid on Friday & is expected to be disclosed to the LSE on Monday.

[DC3 Dave]

Whatever Andrew Tinkler's motive, he's not trying to be helpful.

​​​​​​https://news.sky.com/story/tinkler-s...hares-11605107

[SWBKCB]

A source close to Mr Tinkler said on Friday evening that he was not seeking to disrupt the proposed 1p-a-share takeover of Flybe,

So that's all right, then

Maybe not the done deal it's being portrayed as?

[tigertanaka]

Originally Posted by B Fraser

There's something very fishy going on here. It seems that Flybe have just sold the family silver, 5 minutes before the market closed and at twice the market capitalisation. Have Branson and Stobart just been screwed over ?


RNS Number : 9260M
Flybe Group PLC
11 January 2019

Flybe Group PLC ("Flybe" or the "Group")

Slot Transaction at Gatwick Airport

Flybe Group plc announces that today Flybe Limited, a wholly-owned subsidiary, signed an agreement with Vueling Airlines S.A. (the "Agreement") to receive a total of £4,500,000 (four-and-a-half-million pounds) in respect of slots at London Gatwick Airport. The funds will be paid in two tranches, being receivable in the next few days in respect of slots to be used during the Summer Season in 2019 and for subsequent Summer Seasons. The remainder is due in June 2019 in respect of slots to be used during the Winter Season in 2019/20 and subsequent Winter Seasons.

Good spot but sure why it is fishy. If you are buying a company, there are warranties in the Share Purchase Agreement that will force the seller to disclose any material event that is outside the normal course of business. Selling assets would be covered by this and FlyBe would have to formally inform the buyers about this slot sale. However as £4.5m is a large % of the purchase price (not to mention the fact that VS might have had plans for the LGW slots), the buyers will have been fully aware of this as it would risk scuppering the entire deal.

More interesting that IAG have bought some more slots at LGW when they have struggled to use all the Monarch slots bought in late 2017.

[B Fraser]

Would you not have expected Virgin to halt the sale as a condition of buying the company ? After all, Virgin will be more interested in feeding customers into a major hub rather than flying oil rig workers between SOU and ABZ. The slots are of more immediate value to them than any other asset. The timing of the announcement just before the market closed is obviously deliberate so you have to ask why ? The market reaction on Monday morning will be very interesting, especially given that Mr Tinkler is stoking the bonfire. I haven't worked that one out just yet but one trader described it to me as "ballsy".

[EI-BUD]

Virgin

So Flybe lives on.

On a strategic basis orientating the airline to add value through feeding long haul services that Virgin has will be no.1 priority. Collaboration with AFKL will be big, given their influence. Then Stobart's desires. Then a pruned back network focussing on the top performing routes.

Given Stobart's success with Aer Lingus Regional model and now the placement of Embraer for BACF, will the future shape and size of the new Flybe include a large focus on ACMI?

Substantial changes to the operations at airports like SOU, BHD and NQY would inevitably have huge implications for those airports.

[SWBKCB]

On a strategic basis orientating the airline to add value through feeding long haul services that Virgin has will be no.1 priority.

That would seem to be the case, but:

• LHR is slot constrained, so how much more than can they do there?
• At MAN there is the issue of hubbing from a "challenged" T3 over to T2 for the Virgin LH
• BE already collaborate with AFKL. Certainly there will be slot issues with increasing ops to AMS, and aren't there union agreements at KLM which limit the number of code-share flights that BE can operate?

[rog747]

I don't think many of us saw Virgin coming along at the 11th hour in a rescue deal.

Lots of froth on the web and on here as to the future strategy and operations of the new Company Connect Air, including my tuppence below.

Too early to say on where and on whom the hatchet falls, and where the golden chalice lies.
The existing routes structure and fleet is rather messy for Virgin to comprehend,
Virgin Red didn't last long feeding into LHR thus I don't see at the moment how the new Connect helps to strengthen VS's (and Delta's) L/H Ops at LHR even if NQY ABZ and EDI to/from LHR remain as existing.
(or helping those L/H from Manchester Glasgow or Belfast)

Anyway, interesting times - my thoughts with staff - awful uncertainty for many of them.

[DC3 Dave]

Originally Posted by inOban

Two thoughts.
1. What do people think that the Virgin brand brings to any enterprise in 2019? To me it's redolent of a generation ago. No-one would choose it as a brand name now. As I see it, Branson's involvement with the businesses is limited to collecting the license fees for using the name.

I think you are absolutely correct that nobody would come up with Virgin as a brand name today, it belongs in the 70's. Now it would be offensive regardless of the context. But, because it is so established as a brand when someone says Virgin, we think airline. Others may think radio / leisure centre / holiday / TV / mobile etc. That is its strength. No-one responds with a schoolboy blush to the name, because the first definition in the dictionary isn't what comes to mind.

[racedo]

Originally Posted by B Fraser

Would you not have expected Virgin to halt the sale as a condition of buying the company ? After all, Virgin will be more interested in feeding customers into a major hub rather than flying oil rig workers between SOU and ABZ. The slots are of more immediate value to them than any other asset. The timing of the announcement just before the market closed is obviously deliberate so you have to ask why ? The market reaction on Monday morning will be very interesting, especially given that Mr Tinkler is stoking the bonfire. I haven't worked that one out just yet but one trader described it to me as "ballsy".

If a company owns 90 % of a listed PLC then it has the right to acquire and cancel the other 10% of shares it doesn't own. This happened years ago at Manchester United and at other companies. Only reason for buying 10% at this later stage is to require the buying company to buy the 10% at a higher price than everything else or to get some concessions elsewhere. There is a word for this but will avoid using it.

Having reread the Sky article it appears Mr T is using this for leverage elsewhere.

[racedo]

Originally Posted by rog747

I don't think many of us saw Virgin coming along at the 11th hour in a rescue deal.

Nobody undertakes a rescue in business unless there is a massive and substantial financial return for doing so.

[True Blue]

The share price just before this was announced was about 12p. That was what the market thought the airline was worth with all the bad news in the public domain. Markets are efficient here, it's not like someone knew something the rest didn't. And then the board/management do a deal for 1p? Are they saying the market had them overpriced 12 times?

[ifu05596]

Originally Posted by NickBarnes

I use the NWI-EXT route often, loads often 80% plus nowadays, of course that still doesn't mean it makes money, I fear that regional connection will be lost now and the 6 hour car journey will return.

Perhaps Loganair might pick up some of the routes that *may* fall away. They have picked up Derry-Glasgow after Ryanair pulled out and Glasgow-Düsseldorf next year once Eurowings stops. They have also announced fleet replacement to ATRs from Saabs and may want to increase the amount of rotations each plane does as one would hope reliability increases and less contingency is required.

[runway30]

Originally Posted by True Blue

The share price just before this was announced was about 12p. That was what the market thought the airline was worth with all the bad news in the public domain. Markets are efficient here, it's not like someone knew something the rest didn't. And then the board/management do a deal for 1p? Are they saying the market had them overpriced 12 times?

Clearly there was information that wasn’t in the public domain and that was probably the extent to which the card processors were turning off the cash. The directors will run around pointing at this unique set of circumstances that all other airlines have to cope with but the true story of flybe is incompetent management replaced by even more incompetent management that didn’t even have the competence to recognise that they had a business model that didn’t work. There were many opportunities to address this and shareholders have been poorly served.

[shamrock7seal]

Couldn’t have put it better myself, Runway30.

[22/04]

Couldn’t have put it better myself, Runway30.

Except that I am not sure what that business model was. Was it "to profitably fly smaller aeroplanes on routes (or on routes that require more frequency) that cannot be flown profitably by airlines who operate bigger aeroplanes." That is reasonable but they couldn't do it profitably. And then we have had

"To fly aeroplanes we shouldn't have on routes because no one will take them off our hands"

"To try to replace our franchise partners on routes they know so much better than us"

Any one got a better idea of what they were trying to do.

[SWBKCB]

Clearly there was information that wasn’t in the public domain and that was probably the extent to which the card processors were turning off the cash.

Article in today's Times where BE make it clear that this is what was happening.

[runway30]

There is an interesting story here which is how some city institutions who had built stakes in the company as the price dropped took the decision to sell at the end of December. It will always be the case that city investors can put more resources into analysis than retail investors and in that sense can maybe price a share better than the rest of the market. However, was it the case here that information about the view of card processors was circulating amongst institutional investors giving them inside information compared to retail investors?

[runway30]

https://www.thetimes.co.uk/article/c...eed545aa242334

[racedo]

Originally Posted by 22/04

Except that I am not sure what that business model was. Was it "to profitably fly smaller aeroplanes on routes (or on routes that require more frequency) that cannot be flown profitably by airlines who operate bigger aeroplanes." That is reasonable but they couldn't do it profitably. And then we have had

"To fly aeroplanes we shouldn't have on routes because no one will take them off our hands"

"To try to replace our franchise partners on routes they know so much better than us"

Any one got a better idea of what they were trying to do.

Good summary and in truth nobody has an idea.

Which gets to next question.

What exactly are new owners going to do to drive profitability, over something that has been shown by both BA Connect and Flybe not to work. Slash and burn is the only option with a high % of the portfolio of routes.