The three organisations have committed a £20million bridge loan to support flybe until the completion of the acquisition.
Up to £80million of further funding will be provided after the deal goes through to support its growth.
The combined group intends to continue operating flybe as an independent carrier with a separate UK Air Operator Certificate (AOC) but under the Virgin Atlantic brand.
Virgin Atlantic will benefit from flybe’s nework of regional passengers connecting on to its long-haul services from London and Manchester.
“Flybe plays a vital role in the UK’s transport infrastructure with a UK regional network which uniquely positions it to benefit from growing demands from long-haul carriers for passenger feeder traffic,” says Christine Ourmieres-Widener, Flybe’s CEO.
“However, the industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit. We have been affected by all of these factors which has put pressure on short-term financial performance.
“At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows,” adds Ourmieres-Widener.
“By combining to form a larger, stronger, group, we will be better placed to withstand these pressures. We aim to provide an even better service to our customers and secure the future for our people.”
The combined group also says it will enhance customer experience and, as well as enhancing its presence at Manchester and Heathrow, it may grow further at London Southend Airport.
The combined group will operate independently to Virgin Atlantic under one management team, owned 40% by Cyrus Capital Partners, 30% by Stobart Aviation, a wholly owned subsidiary of Stobart Group, and 30% by Virgin Atlantic Limited.
“We are pleased to have this opportunity to partner with Stobart Group and Cyrus Capital to bring Virgin Atlantic service excellence to Flybe’s customers,” says Shai Weiss, CEO of Virgin Atlantic.
“Together, we can provide greater connectivity to our extensive long-haul network and that of our joint venture partners Delta Air Lines, at Manchester Airport and London Heathrow.”
Flybe will continue operating across the UK and Ireland and in due course will be rebranded to Virgin Atlantic.