Flybe share price nosedives after Stobart Group abandons offer for airline
The owner of London Southend Airport this morning said it was pulling its interest in regional airline Flybe and won't be making an offer for the carrier.
Shares in Flybe dived on the news, sinking 25 per cent in early trading.
In a statement this morning, Stobart Group said it had been "unable to reach agreement on satisfactory terms".
Read more: Flights from this London airport to the Lake District will start in June
The board of Stobart Group has determined that it is not in its shareholders' best interests to increase its latest proposal for Flybe above the level which was rejected by the board of Flybe.
Given this, Stobart Group confirms that it does not intend to make an offer for Flybe.
The firm said it had a range of shared interests with Flybe, along with "a growing franchise arrangement" between the two groups' airlines.
It said it intends to continue the "collaborative working relationship" between both companies.
In response to the statement from Stobart Group, Flybe said:
The board remains highly confident in the prospects of Flybe and believes that the group continues to have an exciting future as an independent company, delivering the sustainable business improvement plan as set out in June 2017.
This plan is focused on driving sustainable profit and cash generation and will see the fleet size reduce to an optimum level for the number of identified profitable routes and make the business demand-driven rather than capacity-led.
Last month, Stobart Group said it was considering a number of options in a potential deal with Flybe, including a takeover approach.
The firm said today a number of possible structures had been weighed up, including "a non-controlling interest in a vehicle to acquire 100 per cent of Flybe."
The company had been reviewing alternative structures for its airline and leasing business that can play "an important part" in the consolidation of the regional airline sector.
In November, Flybe reported a drop of nearly 50 per cent in profits in its first-half results, after previously warning profits would be lower than expected.
The carrier has pledged to work at keeping costs down, trimming its fleet size and focusing resources on fewer, more profitable routes.
Meanwhile, London Southend Airport announced earlier this month it would be starting flights to the Lake District from June, with Carlisle Lake District Airport launching its first commercial and business passenger flights since 1993.
Read more: Stobart Group confirms interest in Flybe deal as the airline's shares soar