Following last week’s news that U.K.-based Flybe is up for sale, Reuters this week reported that Virgin Atlantic is interested in the regional carrier, which has suffered from falling demand, a weaker pound and high fuel costs.
In a four-line statement, Virgin Atlantic, which is 49 percent owned by Delta, stated that: “Virgin Atlantic has a trading and codeshare relationship with Flybe and confirms that it is reviewing its options in respect of Flybe which range from enhanced commercial arrangements to a possible offer for Flybe. Virgin Atlantic emphasises that there can be no certainty that an offer will be made nor as to the terms of any offer.”
Confirmation of Virgin Atlantic’s interest in Flybe saw the regional carrier’s share price rise by 53 percent on Friday. With slot constraints continuing to restrict Virgin Atlantic at London Heathrow Airport, Flybe has offered Virgin Atlantic the ability to offer added U.K. destinations for transiting customers on Virgin’s international services. Virgin Atlantic uses these domestic connections to increase international traffic and compete against main rival British Airways on key trans-Atlantic and Asian routes.
In 2013, Virgin Atlantic operated its own domestic services with four wet-leased Aer Lingus A320 aircraft under the brand name Virgin Atlantic Little Red. Unfortunately, the subsidiary sustained substantial losses, rumored at £3 million per week, and operations ceased in September 2015. FlyBe acquired some of Little Red’s Heathrow slots in 2017 as regulations require a certain percentage of slots at the U.K.’s main airport to be available for domestic services with reduced landing charges.
Virgin Atlantic’s interest in and possible purchase of Flybe would result in further consolidation of the European aviation market. Earlier this year, Ireland’s Ryanair took a majority stake in Austria’s Laudamotion. In addition, Icelandair announced earlier this month its intention to merge with fellow Icelandic carrier, WOW Air.
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