Flybe collapses after last-ditch talks with UK government fail
UK airline Flybe has collapsed after months of talks with the government failed to secure a crucial £100m loan and the deadly coronavirus slashed demand, pushing Europe’s largest regional carrier into bankruptcy in the early hours of Thursday morning.
Flybe confirmed it had entered administration after holding last-ditch talks with the UK government on Wednesday afternoon, a move that puts more than 2,000 jobs at risk and raises uncertainty over scores of regional air routes within the UK.
“All flights operated by Flybe have been cancelled with immediate effect,” the airline said in a statement. “Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business,” the statement said.
“This has been compounded by the outbreak of coronavirus which in the last few days has resulted in a significant impact on demand.” EY is handling the airline’s administration.
The Financial Times revealed earlier on Wednesday that the government had rejected the idea of a £100m state loan to the airline.
Meanwhile, Flybe’s management became increasingly concerned that any cuts to air passenger duty might not kick in until 2021, which would be too late for the airline to survive the coming months.
While Flybe initially had enough money to see the airline past the UK budget next week, the impact of coronavirus on bookings has “sped things up”, according to one person with knowledge of the matter.
“The impact of coronavirus has made a bad situation worse,” said another person close to the airline. “It has been in a pretty precarious position for a while — it doesn’t take much to push it over the edge.”
The airline was taken over by Connect Airways — a consortium of Virgin Atlantic, Stobart Air and hedge fund Cyrus Capital — last year to prevent it falling into administration.
Connect agreed to invest £30m into the airline to continue operations as part of a government rescue package in January.
A potential loan to Flybe was part of a rescue deal announced almost two months ago. But the airline’s request did not met certain criteria set by the government, according to Whitehall officials.
A government spokesman said: “We are working closely with industry to minimise any disruption to routes operated by Flybe, including by looking urgently at how routes not already covered by other airlines can be re-established by the industry.”
Mark Anderson, chief executive of Flybe, which has operated since 1979, said: “The UK has lost one of its greatest regional assets. Flybe has been a key part of the UK aviation industry for four decades, connecting regional communities, people and businesses across the entire nation.”