December 10, 2010 / 9:36 AM / 10 years ago

UK airline Flybe prices London IPO

LONDON (Reuters) - British budget airline Flybe FLYB.L listed in London on Friday, raising up to 66 million pounds ($104 million) for Europe’s largest regional carrier to buy out rivals and expand its fleet.

Flybe, which operates a fleet of 70- to 120-seat aircraft from smaller UK airports such as Southampton, Jersey and Belfast, priced its initial public offering (IPO) at 295 pence per share, confirming a Reuters report on Thursday.

The listing values the company at 215 million pounds ($338.4 million). It had initially offered its shares at between 285 and 385 pence each, but lowered the top end of price guidance to 295 pence on Thursday, the final day of bookbuilding.

Shares in Flybe, which began conditional trading on Friday, were up 7.8 percent at 318 pence by 0859 GMT.

Flybe, which focuses on internal UK routes but flies to about 30 continental European destinations as well, sold 24.4 million new shares in the offering, including an overallotment option, representing around a 30 percent stake in the company.

It said it planned to use half the funds from the share sale to fund the expansion of its aircraft fleet and the other half to strengthen its cash position to allow it to pursue other growth opportunities, such as acquisitions.

Last month the UK’s Sunday Times newspaper said Flybe would use the proceeds to fund the takeover of Flybaboo, a Swiss regional carrier, and an unidentified Finnish airline.

Flybe made an order earlier this year for 140 Embraer (ERJ.N) (EMBR3.SA) aircraft to add to its fleet of 68 Embraer and Bombardier BBDd.TO planes that run on domestic and European routes.

West England-based Flybe, which posted a pretax profit of 12.8 million pounds on revenues of 572.3 million pounds for the year to March 31, bought the former regional airline business of British Airways BAY.L, BA Connect, in 2007.

The carrier’s biggest shareholder, which prior to the offering held a 69 percent stake in the company, is a trust which looks after the estate of the late Jack Walker, the former steel magnate and owner of Blackburn Rovers Football Club.

The trust will own just under 50 percent of Flybe following the IPO, while around 7 percent will be the company’s employees.

British Airways BAY.L, which owned 15 percent of Flybe ahead of the sale, said it planned to subscribe for enough shares in the offer to maintain the size of its holding.

Flybe, which carried more than 7 million passengers last year, recently struck code-share deals with Air France (AIRF.PA) on some European routes and Finnair (FIA1S.HE) on Scandinavian and Baltic Sea co-operation.

It has tried to float several times but has been forced to shelve plans because of tough market conditions.

Bank of America Merrill Lynch was the sole global coordinator and bookrunner on the offer.

($1=.6353 Pound)

Editing by Paul Hoskins and Jon Loades-Carter

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