British airline, Flybe, has fallen into administration – putting more than 2,000 jobs at risk across the country.
The Exeter-based firm narrowly avoided going bust in January, but received a £100m bailout from the government.
Flybe CEO Mark Anderson said: “Despite every effort, we now have no alternative – having failed to find a feasible solution to allow us to keep trading. I am very sorry that we have not been able to secure the funding needed to continue to deliver our turnaround,” he added.
In response to the collapse, a government statement read: “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 reestablished by the industry. ”
Flybe is now advising customers not to travel to its airports, unless they have previously arranged alternative flights.
— Flybe ✈ (@flybe) March 5, 2020
Alan Hudson, Joanne Robinson, Lucy Winterborne and Simon Edel of EY have been appointed as Joint Administrators.
FlyBe collapse a shock to small firms who urge Government to deliver on its Broadband promise
Commenting on the news of FlyBe going into administration, FSB National Chairman Mike Cherry said: “FlyBe ran a number of important domestic routes linking different parts of the UK and its collapse is a blow to our regional economy.
“Public anxiety due to coronavirus has caused a slump in airline bookings, which has a knock-on effect on the thousands of small businesses who have used air travel to attend meetings.
“They will now, understandably, be wondering what is going to be done to replace these routes – this underlines the need for Government to invest in an integrated transport system, including rail.
“This also shows the importance of creating better digital infrastructure in order to allow more people to work from home and schedule meetings remotely.
“The announcement today that MPs will launch an inquiry into Broadband and road to 5G, assessing the Government’s pledge to ensure every home and business in the UK has gigabit-capable broadband by 2025, is welcome and goes some way to addressing these concerns. However, it must now deliver on its promise.”
David Barnes, chief executive officer of the Farnborough Aerospace Consortium (FAC), said the collapse of Flybe was a hammer blow for the industry.
FAC represents hundreds of businesses in the aerospace sector and its supply chain, many of which will be affected.
David said: “This is an incredibly disappointing news and our sympathies are with the staff whose jobs are at risk and the passengers who have booked flights.
“A number of regional airports rely on the Flybe custom for the majority of their flights. At Southampton, for example, Flybe was responsible for nine out of ten flights.
“Business will be affected in a number of ways. Many people use Flybe regularly for work and they will now have to find alternative and often more expensive ways of travelling that take much longer.
“And businesses that support Flybe or are reliant on their passengers will also be hit.
“These include the retail businesses in regional airports as well as those companies – many of them small and medium sized – who support the airline in other ways, from engineering firms to cleaning businesses.
“Our hope of course is that a buyer is found as quickly as possible so that as many routes as possible can continue to be served.”
Flybe, which is owned by Virgin Atlantic, Stobart and Cyrus Capital, an American hedge fund, has blamed the coronavirus crisis for hastening its collapse.
More than 2,000 people are employed by Flybe whose jobs are now at risk.
Mark Halstead, partner at financial risk firm Red Flag Alert
It’s not like the consortium of Virgin Atlantic, Stobart Air and Cyrus Capital didn’t know the scale of the problems they were taking on when they purchased Flybe. It was a very big, loss-making, insolvent airline that faced competition on its popular routes and soft demand on some of its other, less attractive regional routes.
Additionally, the last decade has been a struggle for Flybe. An ill-advised purchase of 35 Embraer jets in 2010 was the first expensive mistake, followed by a blundered IT upgrade in 2016.
Inevitably there is going to be reputational damage for Stobart and Virgin for throwing in the towel so soon after the purchase 12 months ago, but they will claim coronavirus left their hands tied.
In reality, coronavirus is a short-term hit, and you’ve just got to assume they are beginning to question their original decision to make the acquisition.
However, it didn’t cost much. Flybe cost no more than £2 million to buy and they were reported to have invested £100m (£20m for working capital and an £80m investment).
A cynic would say the consortium had set some very specific financial targets when they made the purchase, and plan B was to put the company into administration so that either a leaner, healthier business would come out of administration, or Virgin and Stobart would acquire some of the more attractive routes.