Flybe out to raise £60m in London float

Flybe, Britain's biggest domestic airline, today gave the green light to its long-awaited plans to float on the London Stock Exchange.

It hopes to raise £60 million in an IPO that could value the budget carrier at £200 million.

Flybe has been wavering over a float for months but held off because of market uncertainty.

Today, however, despite market uncertainty over eurozone debt, chief executive Jim French said he was pushing ahead with a stock market listing to help the airline "achieve the next stage in its exciting strategy for growth".

French plans to use half of the proceeds of the flotation to buy more planes and the rest to build a war chest for more codeshares, adding to those with British Airways and Air France, or acquisitions.

The airline, which primarily flies between UK regional airports and on short trips between the UK and continental Europe, said it has plans to "export its business model into continental Europe".

The float is backed by British Airways, which has a 15% stake in Flybe after selling its regional carrier BA Connect to Flybe in 2007.

BA said it planned to buy enough shares to maintain its existing share.

The other major investors, who have not pledged to buy new shares but said they won't sell their existing stakes, are Rosedale, the family trust of the late industrialist Jack Walker which owns around 65%, and Flybe staff, who own 16% through an employee share scheme.

The float, which is due to take place next month, will be made of new shares so will not trigger a windfall for existing shareholders.

Flybe did not put out pricing details and said it wouldn't do so until it had gauged the level of interest from an investor roadshow over the next few weeks, but analysts expect the deal to value it at around £200 million.

It will trigger another fees bonanza for bankers, with Bank of America Merrill Lynch acting as the bookrunner, Investec as joint lead manager and Execution Noble co-lead manager.

In the year to April, Flybe made a pre-tax profit of £5.7 million on turnover of £570.5 million.