UK regional carrier Flybe will be rebranded as Virgin Atlantic under a £2.2 million ($2.81 million) takeover deal announced Jan. 11 by a consortium comprising Virgin Atlantic Ltd., Stobart Group and Cyrus Capital.

Exeter-based Flybe said in November that it was seeking a buyer. The airline had run into financial difficulty as a result of high fuel costs, currency fluctuations and the uncertainty surrounding the UK's planned exit from the European Union. Virgin Atlantic confirmed later that month that it was in talks about a possible deal.

In a joint statement, Virgin Atlantic, Stobart Group and Cyrus Capital said they had formed a new company—Connect Airways—through which they had reached an agreement with Flybe’s board to make a cash offer for the entire share capital of Flybe.

Stobart Group, the parent company of Ireland-registered aircraft, crew, maintenance and insurance (ACMI) and charter operator Stobart Air, will fold its airline and aircraft leasing businesses into Connect Airways. The three companies have committed to provide a £20 million bridge loan facility, “to support Flybe’s ongoing working capital and operational requirements.”

Once the acquisition is completed, the group will invest up to £80 million to support Flybe’s future growth. The regional carrier “will be rebranded to Virgin Atlantic” eventually, and will continue to operate a network of routes across the UK and Ireland. Flybe will continue to operate as an independent carrier with a separate UK air operator’s certificate (AOC) under the Virgin Atlantic brand, while Stobart Air will keep its separate Irish AOC.

The group will operate independently to UK long-haul carrier Virgin Atlantic under one management team and will be 40% owned by Cyrus Capital, 30% by Stobart Aviation—a wholly owned subsidiary of Stobart Group—and 30% by Virgin Atlantic Ltd.

“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,” Flybe CEO Christine Ourmieres-Widener said.

Following the acquisition, Flybe will feed into Virgin Atlantic’s long-haul network from Manchester and London Heathrow. Virgin Atlantic will be hoping the acquisition proves to be third time lucky after two failed attempts in the past to develop a short-haul network.

The airline previously courted UK-based bmi, which was ultimately merged into British Airways, before embarking on a short-haul wet-lease operation in partnership with Aer Lingus known as Little Red. However, this short-lived operation closed down in 2015 because of weak demand.

Virgin Atlantic CEO Shai Weiss said of the Flybe deal: “Together, we can provide greater connectivity to our extensive long-haul network and that of our joint venture partners, [Atlanta-based] Delta Air Lines, at Manchester Airport and London Heathrow. In the near future, this will only increase through our expanded joint venture partnership with Air France-KLM.”

Stobart Group CEO Warwick Brady described the deal as “the best way for us to play an active role in regional airline consolidation.”

Kerry Reals,