- Summary:
- The UK’s largest regional airline, Flybe, is now officially insolvent as the coronavirus outbreak weighed on air travel, leaving passengers stranded.
The UK’s largest regional airline, Flybe, finally went into administration amid the coronavirus outbreak and after the UK government rejected its request for a loan. According to the UK Civil Aviation Authority (CAA), all flights with the airline are cancelled. It also advised passengers not go to airports which left many of them stranded all over Europe.
In January, I reported that the company was at the brink of collapse. Back then, there were only rumors of Flybe asking for a bailout from the government. The airline, which flies 8.5 million people per year to 170 European countries, saw its financial troubles begin at the wake of Brexit. It was struggling to cope with rising competition amid higher operation costs because most of its expenses were in dollars while its income was in British pounds.
For the last two months, Flybe had been working to get a loan from the UK government amounting to 100 million GBP. However, in a letter addressed to employees, Flybe chief executive Mark Anderson apologized and said they were not able to secure funding in order to continue operations. The company cited that lower demand for air travel caused by the coronavirus outbreak made it impossible to move forward.
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What happens next?
The company is now officially insolvent. It will be overseen by appointed administrators who will work to repay Flybe’s creditors with its remaining assets.
As for stranded passengers and staff, First Rail train operators are offering free rides. easyJet is also giving out discounted “rescue” fares while allowing staff to board their planes for free.
As for UK Prime Minister Boris Johnson, the collapse of the 41-year-old airline undermines his administration. He had promised to “level up” the country by investing in transportation. Now that Flybe is no longer in operation, there are concerns about connectivity across the UK. Smaller airports like Exeter, Birmingham, and Southampton will see less activity and so will local businesses.
More importantly, it was not just Flybe that was heavily-hit by the coronavirus outbreak. It has been reported that Virgin has seen its bookings drop in half. Consequently, it adopted emergency cost-saving measures. Ryanair, easyJet, and British Airways have also cancelled flights.
Now the question is, will the coronavirus claim more corporate casualties after Flybe?