The Virgin Atlantic and Stobart Group consortium buying troubled regional airline Flybe has overhauled its takeover after the carrier failed crucial financing terms.
Flybe said it had failed to meet the conditions for receiving a promised £20 million bridge loan under the takeover deal announced on Friday as credit card banks clamped down amid fears over the airline’s financial security.
Shares, which have crashed in value as the airline’s woes have become apparent, nearly halved to 2.2p.
But the consortium of bidders, which also includes investment firm Cyrus Capital Partners, has overhauled its takeover in a bid to speed up the deal and offer immediate financial support to Flybe.
It will now pay £2.8 million to take control of the main trading company Flybe and the online arm Flybe.com in a deal set to complete by February 22, while later completing the purchase of the wider holding company.
The buyers have also offered a revised bridge loan of up to £20 million, with £10 million released on Tuesday to “support the business”.
Shareholders will still receive just 1p a share for the holding company of Flybe, as agreed on Friday.
Flybe said the revised funding plan “provides the security that the business needs to continue to trade successfully” and that the takeover offer will continue as planned.
Under the plans, the airline will be combined with Stobart Air in a joint venture called Connect Airways.
Cyrus will own 40% of the new company, while Virgin and Stobart will take 30% apiece.
Flybe chief executive Christine Ourmieres-Widener said last week the firm had been forced to seek a buyer due to higher fuel costs, currency fluctuations and Brexit uncertainty.
Flybe also announced on Friday that it had agreed with Vueling Airlines to sell its slots at London Gatwick Airport for £4.5 million.
Vueling is a subsidiary of British Airways owner IAG.
The funds will be paid in two tranches, one due in the next few days for slots to be used this summer, and the second due in June for slots to be used during winter.
The regional airline put itself up for sale in November after warning over profits in 2018.
The Exeter-based carrier is battling challenging conditions in the airline industry and has suffered with falling demand and a £29 million hit from rising fuel costs and the weak pound.
Flybe has 78 planes operating from smaller airports including London City, Southampton and Norwich, and flies to destinations across the UK and Europe.
It carries around eight million passengers a year.
Trade unions have already raised concerns over the impact of Flybe’s sale on the carrier’s 2,300 employees.