Connect Airways, a consortium including Virgin Atlantic (VS, London Heathrow), Stobart Group, and investment firm Cyrus Capital, has reached an agreement with flybe. (BE, Exeter) wherein it will eventually acquire the entire share capital of the struggling British regional carrier.

The consortium will initially provide a GBP20 million pound (USD25.5 million) bridge loan to support the current operations and working capital requirements of flybe. Following completion of the acquisition, the consortium will provide an additional up to GBP80 million pounds (USD101.8 million) to the airline.

Virgin and Stobart will each own 30% with 40% of the Connect Airways consortium to be owned by Cyrus Capital.

Stobart Group's units, Stobart Air (RE, Dublin Int'l) and Propius Leasing, will also become parts of Connect Airways, although the airline will retain its current Irish Air Operator's Certificate (AOC).

Flybe will continue as an independent operating carrier with a separate UK AOC under the Virgin Atlantic brand. The carrier will act primarily as a feeder airline into London Heathrow and Manchester Int'l, with potential to develop London Southend as a regional hub in the future.

The consortium will be managed independently of Virgin Atlantic, which will hold 30% of shares. Cyrus Capital will own a 40% stake, while Stobart Aviation, a subsidiary of Stobart Group, will hold the remaining 30%.