Flybe seeks new acquisitions despite downturn

By John Bowker

LONDON (Reuters) - Airline Flybe is scouting around for more acquisitions following the integration of the regional arm of British Airways (BAY.L), despite the massive downturn affecting the industry.

"Flybe is acquisitive and there will be more deals. We can definitely see the fleet growing (by acquisition)," a spokesman told Reuters on the sidelines of an airlines conference.

Analysts said the most obvious target for the privately-owned carrier would be bmi regional BMI.UL, the UK-focussed arm of Bmi that may be put up for sale by new owner Lufthansa (LHAG.DE).

"I think regional would be a very good fit for Flybe," said Andrew Lobbenberg, an airlines analyst at Royal Bank of Scotland. That would be a better bet than tilting at bmibaby, its low-cost sister airline also expected to be put on the auction block.

"There's a reasonably good fit between the operators, and it would fit with Flybe's strategy of trying to consolidate the UK regional market," said Blue Oar analyst Douglas McNeill.

Flybe runs relatively small planes from less popular airports around the UK including Guernsey and Inverness. It has annual revenues of just over 500 million pounds and 67 million pounds in cash.

It bought BA's then loss-making regional business BA Connect in 2006, handing BA a 15 percent stake in Flybe as a result of the deal.

The Flybe spokesman declined to comment on where the airline was looking to make acquisitions.