Airline Flybe 'set to announce plans for stock market flotation'

Britain's biggest domestic airline, Flybe, is gearing up for a stock market flotation that is expected to value the company at £200m.

The regional airline, which operates services from Leeds Bradford International to London Gatwick, Aberdeen, Belfast City, Exeter and Southampton, is expected to announce its intention to float by the end of this week.

Investment banks Merrill Lynch and Investec are being lined up as advisers.

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The carrier has plans to double in size through organic growth and buying overseas carriers such as Swiss regional airline Flybaboo and a Finnish carrier.

The Flybe brand is eight years old but has traded under various names over the past 20 years.

It was set up as Jersey European Airways and then became British European Airways as it expanded with the backing of the late Sir Jack Walker, the steel tycoon who owned Blackburn Rovers football club.

The Walker family trust owns nearly 70 per cent of Flybe and is not expected to sell any of its shares in the float.

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British Airways owns 15 per cent of the shares, which it acquired when Flybe bought BA's lossmaking regional airline BA Connect.

Chief executive Jim French owns seven per cent of the shares and Flybe staff own the remaining eight per cent.

Despite losing 21m during the ash cloud crisis, Flybe is one of the few European carriers that reported profits this year.

It posted pre-tax profits before exceptionals of 6.8m on sales of 570.5m in the year to March 31.

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Flybe flew 7.2 million passengers in the financial year, slightly down on 7.3 million the year before, and is now the biggest carrier of UK domestic passengers. It flies a total of 207 routes in 13 countries.

The Exeter-based carrier recently signed a codesharing agreement with Air France.

A spokesman for Flybe said the company refused to comment on rumour and speculation.

There has been more upbeat news recently from the airline industry. British Airways recently returned to half-year profits for the first time in two years in recent weeks.

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EasyJet is expected to report increased profits in its full year results on Tuesday.

Flybe is looking at potential acquisitions of regional airlines in Europe after weathering the economic storm.

But the airline has said it will maintain its regional ethos, with flight times continuing to average less than an hour, on board planes with just 85 seats.

In September Flybe said it had put in an order to purchase up to 140 new aircraft, which would replace some of its current 68-strong fleet.

The carrier posted pre-tax profits before exceptionals of 6.8m for the year to March 31, down from 12.8m in the previous financial year after a marginal decline in turnover.