Shares in Europe’s largest regional airline Flybe (FLYB) have plummeted 21% to 36.9p after aircraft leasing firm Stobart (STOB) said it was no longer interested in making a takeover offer.
Stobart, which owns London Southend Airport, made a takeover proposal in February. The company says it was unable to reach a satisfactory agreement and it was not in shareholders’ interests to increase the value of its original proposal which had already been rejected by Flybe.
Earlier this year, Stifel analyst Sam Dindol said the transaction made strategic sense as Stobart could have got a strategically useful asset at a potentially attractive price.
For Flybe, Dindol argued the takeover offer could have led to a ‘further uplift’ in the number of routes from London Southend Airport and helped drive passenger growth to its 5m target by 2022.
Flybe has struggled amid higher maintenance costs to improve the reliability of its aircraft, as well as operating in an oversupplied European market. Last October saw the business issue its second profit warning in a year.
The airline has been struggling to recover and progress is slow. In the three months to 31 December 2017, Flybe cut capacity and boosted sales, although maintenance costs increased, albeit at a slower rate.
The company said in January that it expected further improvements to have been made albeit at a ‘slightly slower rate’ in the final quarter of its financial year (ending 31 March 2018).
