Flybe float helps fund expansion take-off

Published on Monday 29 November 2010 20:23

FLYBE, the regional airline group run by Scotsman Jim French, yesterday confirmed plans for a flotation by the end of this month to raise £60 million of new money for acquisitions and fleet expansion.

• Jim French. Picture: PA

The float, which it is thought will value the airline at about 200m, will see French's 7 per cent stake worth about 14m. He has no immediate plans to sell any of his holding.

Berwickshire-born French said the airline was "delighted" to be coming to the stock market. He said: "The company has come a long way in a short time, from its origins as a provincial carrier to being one of Europe's leading regional airlines. A listing will assist Flybe in achieving the next stage in its exciting strategy for growth."

Flybe said half the funds from the share sale would bankroll the expansion of its aircraft fleet, and the other half to pursue growth opportunities including "targeted acquisitions".

The investor roadshow began yesterday, with pricing of the flotation expected by the end of next week or early the following week. It is expected about 25 per cent of shares will be free float.

There were reports in November that Flybe would use part of the proceeds to fund the takeover of Flybaboo, a Swiss regional carrier, and an unidentified Finnish airline.

Flybe ordered 140 Embraer aircraft earlier this year to add to its fleet of 68 Embraer and Bombardier planes that run on domestic and European routes.

The group, based in Exeter, posted a pre-tax profit of 12.8m on revenues of 572.3m for the year to end-March.

Flybe, focusing on niche UK routes as well as 45 routes between the UK and France, carried seven million passengers last year. It claims to operate four times as many domestic routes as any other carrier.

The stock market listing is its most significant milestone since French, group chairman and chief executive, masterminded the acquisition of BA Connect, the former lossmaking regional airline business of British Airways, in 2007.

Gerald Khoo, transport analyst with Arbuthnot, said: "They are well positioned in the UK and integrated the BA Connect business well, so you would think their aim would be to try something similar in another European market."

Flybe's biggest shareholder, with a 69 per cent stake, is the trust that looks after the estate of the late Jack Walker, the former steel magnate and owner of Blackburn Rovers FC.

British Airways, which took a 15 per cent stake in Flybe at the time of the BA Connect sale, said it planned to maintain the size of its holding.