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Stobart writes down £50m after Flybe collapse
5th Mar 2020 12:20
(Sharecast News) - Stobart Group said it would write down more than £50m of investments in the consortium that owned the collapsed airline Flybe.
The infrastructure group said its initial investment in Connect Group was made up through the sale of Stobart Air and its aircraft leasing business Propius. The non-cash balance sheet impact is £43.3m and an extra £7m investment in early 2020.
"The value of both these investments will now be written down to £nil on its balance sheet," Stobart said. "The group has also foregone deferred interest that it would have benefitted from in future periods."
Stobart said Stobart Air was not a wholly owned subsidiary of Connect because Stobart Air's employee benefit trust owns 60% of the voting rights. As such Stobart Air's ongoing ability to trade is not directly impacted by the decision to place Flybe Limited into administration," Stobart said.
The company's shares fell 7% to 76.3p at 12:46 GMT.
Flybe went into administration overnight after a slump in passenger demand linked to the COVID-19 coronavirus exacerbated existing pressures on its finances. Stobart, Virgin Atlantic and investment firm Cyrus Capital joined forces to buy the regional UK airline in 2019 by forming Connect.
"Flybe had shown promising signs of a turnaround despite the delay," Stobart said. "However, despite the best efforts of all, not least the Flybe people, the impact of COVID-19 on Flybe's trading means that the consortium can no longer commit to continued financial support."
Stobart said its Southend airport would suffer a short-term impact from Flybe's failure because the airline had planned to operate 10 routes from Southend from spring 2020. "However, the long-term prospects of that airport remain compelling," it said.
The infrastructure group said its initial investment in Connect Group was made up through the sale of Stobart Air and its aircraft leasing business Propius. The non-cash balance sheet impact is £43.3m and an extra £7m investment in early 2020.
"The value of both these investments will now be written down to £nil on its balance sheet," Stobart said. "The group has also foregone deferred interest that it would have benefitted from in future periods."
Stobart said Stobart Air was not a wholly owned subsidiary of Connect because Stobart Air's employee benefit trust owns 60% of the voting rights. As such Stobart Air's ongoing ability to trade is not directly impacted by the decision to place Flybe Limited into administration," Stobart said.
The company's shares fell 7% to 76.3p at 12:46 GMT.
Flybe went into administration overnight after a slump in passenger demand linked to the COVID-19 coronavirus exacerbated existing pressures on its finances. Stobart, Virgin Atlantic and investment firm Cyrus Capital joined forces to buy the regional UK airline in 2019 by forming Connect.
"Flybe had shown promising signs of a turnaround despite the delay," Stobart said. "However, despite the best efforts of all, not least the Flybe people, the impact of COVID-19 on Flybe's trading means that the consortium can no longer commit to continued financial support."
Stobart said its Southend airport would suffer a short-term impact from Flybe's failure because the airline had planned to operate 10 routes from Southend from spring 2020. "However, the long-term prospects of that airport remain compelling," it said.