Flybe tanks as Stobart ditches bid

Shares in Flybe tanked on Thursday as Stobart said it no longer plans to make a bid for the regional airline after the companies failed to agree on "satisfactory" terms.

"The board of Stobart Group has determined that it is not in its shareholders' best interests to increase its latest proposal for Flybe above the level which was rejected by the board of Flybe. Given this, Stobart Group confirms that it does not intend to make an offer for Flybe."

Stobart, which owns London Southend Airport, went on to say that it plans to continue the collaborative working relationship it has with Flybe, as both businesses enjoy a range of shared interests and a growing franchise arrangement between their airlines.

Flybe said on Thursday: "The board remains highly confident in the prospects of Flybe and believes that the group continues to have an exciting future as an independent company, delivering the Sustainable Business Improvement Plan as set out in June 2017.

"This plan is focused on driving sustainable profit and cash generation and will see the fleet size reduce to an optimum level for the number of identified profitable routes and make the business demand-driven rather than capacity-led."

Stobart had said last month that it was considering a number of options in a potential deal with Flybe, which included a takeover approach.

"A number of potential structures have been considered including taking a non-controlling interest in a vehicle to acquire 100% of Flybe likely to be in cash. It is not possible to say, at this stage, whether a transaction will take place, whether a firm proposal will be made or, if it is, the form a transaction to combine the airlines might take," it said at the time.

At 0805 GMT, Stobart shares were up 0.7% to 231p while Flybe shares were down 20% to 37.20p.