Stobart lands £700m approach for slice of Southend Airport

Stobart Group, the listed infrastructure conglomerate, has received a £700m approach to buy a stake in Southend Airport - even as the crisis engulfing Britain's aviation industry deepens.

Sky News has learnt that AviAlliance, the German-based company which operates airports in Athens, Budapest and Puerto Rico, has tabled a proposal to acquire a 25pc stake in the Essex site.

City sources said the approach from AviAlliance had been made in recent days and was under discussion by the Stobart board.

The offer comes in the wake of the collapse of Flybe, Europe's largest regional airline, in which Stobart held a 30% stake.

Flybe was one of Southend Airport's biggest customers, although executives have insisted that its long-term ambitions of reaching 20 million passengers annually will not be deterred by the carrier's demise.

EasyJet and Ryanair - both of which announced savage cuts to their schedules on Monday as the COVID-19 crisis threatened to decimate the airline industry - both operate flights from Southend.

One insider said the approach from AviAlliance valued Southend at about £700m, although Stobart executives are said to believe it could be worth closer to £800m.

At the lower end of that range, the sale of a 25% stake in the airport would generate proceeds of £175m - almost equivalent to its parent company's entire market capitalisation of £182m.

The approach from AviAlliance, which could include an option to increase its stake, is likely to be backed by Stobart's leading shareholders, who have seen its value plunge in recent years.

The company, which also owns interests in biomass plants, rail engineering and former sister company Eddie Stobart Logistics, has been struggling to recover from a bitter boardroom war.

Its former chief executive Andrew Tinkler was sacked as a director in 2018 and then mounted a legal case to be reinstated.

A bitter legal fight ensued which found that Mr Tinkler had breached his director's duties but also resulted in Stobart withdrawing its allegation that he had made improper expenses claims.

Some of the company's directors were criticised by the former chief for using company funds to gerrymander the vote at the subsequent AGM.

Mr Tinkler also tried to derail Flybe's takeover by the consortium in which Stobart participated, and which was led by Virgin Atlantic.

Stobart is understood to be keen to pursue a transaction with AviAlliance, although the coronavirus outbreak may make it harder to agree a valuation.

Based in Germany, AviAlliance was formerly known as Hochtief AirPort and includes Düsseldorf and Hamburg airports in its portfolio.

It is owned by the Public Sector Pension Investment Board, one of Canada's largest pension funds.

The price tag put on Southend comes as many regional airports fight for survival in the aftermath of Flybe's collapse.

The Exeter-based airline served UK destinations including Aberdeen, Newquay, Norwich and Southampton.

Executives at Southampton have warned that it faces making layoffs as a result of the loss of business from Flybe.

At Southend, which serves two million passengers a year, the runway is being upgraded to accommodate larger aircraft.

A new arrivals terminal capable of handling seven million passengers annually is in the planning phase.

UBS, the investment bank, is understood to be advising Stobart on the approach from AviAlliance.

A Stobart Group spokesman declined to comment on Monday.