Brexit and fuel costs force airline Flybe to put itself up for sale

(c) Sky News 2018: <a href="http://news.sky.com/story/brexit-and-fuel-costs-force-airline-flybe-to-put-itself-up-for-sale-11553619">Brexit and fuel costs force airline Flybe to put itself up for sale</a>
 

Flybe, the UK-based airline, is putting itself up for sale weeks after a savage profit warning triggered by currency volatility and higher fuel costs sent its shares plunging.

Sky News has learnt that the Exeter-based carrier, which said last month that it expected to lose £12m this year, will announce to the London Stock Exchange (Other OTC: LDNXF - news) on Wednesday that its board has begun exploring a sale to or merger with a rival.

Bankers at Evercore have been brought in to handle the talks about a potential deal.

Sources said a combination of Brexit-related uncertainty‎, the weaker pound and soaring fuel costs had led Flybe's directors to conclude that a takeover was likely to be required to preserve its future.

The news will be disclosed alongside Flybe's interim results.

One potential suitor is likely to be Stobart Group, the owner of Southend Airport, where ‎Flybe is based, bankers said on Tuesday evening.

Stobart, which is the focus of a bitter courtroom battle between board members and its former chief executive, abandoned a previous bid ‎earlier this year.

Flybe, which is now valued at just £25m by the stock market, remains one of the UK's best-known airline brands, carrying thousands of passengers between second-tier British airports and European destinations.

The carrier has cut hundreds of jobs and closed unprofitable sites as it has sought to exert a grip on costs amid an intensifying industry price war.

At the end of September, Flybe retained a fleet numbering 78 aircraft, and has promised investors that it would continue to reduce capacity to focus on its most popular routes.

"Consumer demand in domestic and near-continent markets has weakened in recent weeks and the board now expects this to continue into the second half," the company said last month.

"This together with higher fuel prices and weaker sterling will impact the expected second-half profit performance."

Christine Ourmieres-Widener, Flybe's chief executive, said at the time that the company was focused on "stronger cost discipline...against the headwinds of currency and fuel costs".

It was unclear which other airlines might be interested in acquiring Flybe, although bankers speculated that turnaround funds would examine offers to take the company private.

Apart from the Brexit-related impact on sterling, the UK's departure from the EU is also causing profound uncertainty for investors in British airlines with a no-deal outcome still a possibility.

A Flybe spokesman declined to comment.