Flybe ‘Close to Collapse and in Need of Government Rescue’

Written by: Keith Tully

Published: 4th March 2020

Flybe PlaneThe airline Flybe is reported to be close to collapse as it continues to seek an emergency loan of £100 million from the government.

It’s understood that no loan will be given to what is the UK’s largest domestic airline operation, which came close to collapse in the early weeks of 2020 amid a serious financial crisis that it is yet to fully resolve.

It could be that the company will fall into insolvency and administration in a matter of days if no rescue package is forthcoming, according to Sky News.

Ongoing discussions involving stakeholders at Flybe and the British government are now described as being “last ditch” with an already bad financial situation for the company having been made considerably worse in recent days by issues relating to the spread of coronavirus.

The virus has led to a dampening of demand for flights worldwide and Flybe has seen something of a collapse in its bookings.

More than 2,000 jobs will be at risk if Flybe were to fall into administration, while regional airports would expect to be badly impacted by that outcome as well.

The airline avoided collapse earlier this year partly because the government said it would conduct a review of Air Passenger Duty and introduce changes that would benefit Flybe and brighten its financial prospects.

However, it now appears that the airline has been pushed into a situation that requires more direct intervention from government.

Among the questions being considered by the government is whether any other airlines could or would step in to replace flights currently offered by Flybe in the event that the company could no longer operate.

Flybe entering administration could see large numbers of people who rely on its services to travel to and from different regions of the UK left with far fewer options when it comes to taking internal flights.

Around 40 per cent of all domestic flights in the UK are accounted for by Flybe planes and the airline carries an estimated 9 million passengers on an annual basis.

Meanwhile, Michael O’Leary, chief executive of the budget airline Ryanair, has been among the most vocal critics of the idea that the government should provide financial backing to bailout a business that might otherwise fail.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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