Virgin and Flybe in the tree, K-I-S-S-I-N-G...

Deal reached

https://www.bbc.co.uk/news/business-511 ... nel=social

This now seems very high risk for Virgin.

Flybe cannot be turned around without substantial investment. If it goes under after the rebrand to Virgin Connect, it will be blamed in the fall out.

It looks like EDI to LHR fares on flybe (virgin connect) are now available to book on the VS site. From £79 with no luggage, £157 with luggage but no info on miles or tier points (yet).

EDI - MAN also available from £70 and £148

Slowly slowly .....

David

They've also updated the Virgin Connect website:
https://www.virginconnect.co.uk

An interesting thing to point out is that under the F&Q's it says they're making a new loyalty programme.

https://www.bbc.co.uk/news/business-51134859

Flybe back to Gatwick. Wonder if any more Gatwick flights will appear. (EDI please please please )

David

And another update from “the Boss”

https://www.bbc.co.uk/news/business-51140977

I’ve got some pretty mixed feelings about this.

On the one hand, Connect would have been looking for ways to make the underlying FlyBe business to become more viable. The apparent government support and possibility of a review of APD move that demonstrably in the right direction.

There is still a question of whether any legacy issues such as onerous contracts will remain a problem, but that may be something for another day.

On the other hand, I was very surprised that FlyBe were in so much trouble so quickly and that is a serious concern. I am also not sure that the government haven’t opened themselves up to further questions over the basis upon which they have taken this decision.

Either way - it’s important that Vs make the most of this situation and progress with restructuring the business ASAP...

What on earth is going on at Connect...

https://www.bbc.co.uk/news/business-51244308

Sunday Telegraph reporting Flybe in talks with airports (including BHX GLA ABZ and SOU) to defer payment of landing fees. Also reporting the last crisis of the £10 million was due to taxman threatening to wind up business over unpaid taxes.

Flybe must have been some basket case before they bought it.

I hope for employees and passengers sake, this can be turned round and integrated without anymore delays and crisis.

David

So they ditched Little Red for losing $3m a week...

[mitchja]

So they ditched Little Red for losing $3m a week...

Little Red was only ever a domestic airline. FlyBe / Virgin Connect is a regional airline. They are 2 very different business models serving different markets.

FlyBe's fleet are smaller A/C carrying fewer pax.

FlyBe are connecting small regional airports to larger hubs and not just carrying pax from one major UK airport to another.

A £100m loan, on top of a £106m debt, will be underscored in bright red ink on the company's balance sheet under current and long-term liabilities, regardless of the "business model".

Cyrus Capital will only have a finite amount of patience...

I think we can all agree that irrespective of the business model of Virgin Connect vis a vis Little Red, an affiliate that bleeds cash is not going to remain trading for long.

To that end - what is the plan?

My best guess is to use what looks like playing around the fringes of LHR slot trading (ie swapping the LHR-NQY FlyBe slots with AF/KL to use on CDG/AMS-LHR so that VS can use the CDG/AMS slots on long haul) as a capitalisation tool to restructure Virgin Connect around a network at MAN, but which could be moved lock stock and barrel to LHR if R3 is ever built.

There are clearly a lot of holes in this theory - but it’s the best I have at present and is loosely based on public statements.

Any advance on this would be welcome!

https://www.bbc.co.uk/news/business-51453196

A new update

"The company said on Sunday that "the airline is being supported by its shareholders and leading suppliers, is managing its cash position carefully and currently has strong liquidity" "

So apparently the new chancellor isn't in favour of APD cuts and the deal is again, er... up in the air.

They (the connect airways consortium) need to crack on and restructure the business - if their objective is to keep it as a going concern.

So apparently the new chancellor isn't in favour of APD cuts and the deal is again, er... up in the air.

I thought all the Government had promised was to review APD and the possibility of a separate domestic rate and that was enough to satisfy the investors.

Connect have done nothing to build a network that feeds VS this year. What are they doing?

So apparently the new chancellor isn't in favour of APD cuts and the deal is again, er... up in the air.

I thought all the Government had promised was to review APD and the possibility of a separate domestic rate and that was enough to satisfy the investors.

Exactly! And the new chancellor is opposed to any change in APD.

Connect have done nothing to build a network that feeds VS this year. What are they doing?

I think that after buying FlyBe they have discovered financial problems that were not apparent when going through the acquisition DD process - and they are now having to sort these out.

I’ve seen a case study article which suggests that other similar regional airlines have circa 50% of their flights either originating or ending at its hub. For FlyBe, that figure is significantly south of 30% (I forget the figure I’m afraid so happy to stand corrected).

This suggests that concentrating on flowing passengers via MAN (Whether short or long haul connecting) is a better strategy than the one at present - but of course they can do nothing if the business is teetering in the edge as appears to be the case now...

[mitchja]

Not sure if this has already been mentioned, but pretty much all FlyBE routes are now bookable via the VS website.

And some I have checked have been cheaper on VS
And perversely, Loganair now offers Flybe flights cheaper than Flybe directly.

It's not looking good. The Coronavirus is impacting bookings which doesn't help their precarious position already and a state loan is looking unlikely to be approved, so it's either the government cuts APD in the upcoming budget or it could well be the end if reports that it only has finances to survive the month are true...

https://www.ft.com/content/6c37bb36-5df ... 9c2307bcd4

Sky’s Mark Kleinman reporting that staff from EY are travelling to regional airports across the UK in preparation for Flybe falling into administration in the coming hours.

When airlines collapse it tends to happen at night when as many aircraft as possible are at or en route to their home base, to avoid them being impounded by airport authorities that may be owed money.