European Commission approves Flybe acquisition
The purchase of Flybe by a consortium of companies led by Virgin Atlantic has been approved by the European Commission under the EU Merger Regulation
9 Jul 2019
The approval comes months after the consortium purchased Flybe for £2.2m which valued the shares at 1 pence each. In addition to buying the airline, the consortium agreed to inject $125m (£96m) into the business through a bridging loan and further investment.
Connect Airways is a consortium of Virgin Atlantic, Stobart Aviation and Cyrus Capital Partners. They have agreed to acquire and operate Flybe, Propius Holdings Ltd which is Stobart’s aircraft leasing business, and Stobart Air which is Stobart’s operating airline business.
The acquisition of Flybe was subject to the purchaser, Connect Airways, meeting conditions agreed with the Commission under the EU Merger Regulation.
The Commission says it was concerned about near monopolies on two direct European air routes, running between Birmingham and Amsterdam and Birmingham and Paris. Specifically, it was concerned that Air France-KLM would gain indirect control over Flybe because of its joint control over Virgin Atlantic and congestion at both Amsterdam Schiphol and Paris Charles de Gaulle airports which would block competitors from competing on these routes.
To redress this, Connect Airways has agreed to the release of five daily slot pairs at Schiphol and three at Charles de Gaulle to competing airlines if they want them, a commitment which the Commission believes fully addresses its concerns.
Connect Airways was granted a derogation under the EU Merger Regulation which enabled it to acquire Flybe’s shares prior to the merger clearance subject to strict conditions, particularly those related to voting rights. This was designed to protect consumers by preventing flight cancellations and protect workers’ jobs.