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Published on Thursday, March 5, 2020

Flights grounded as Flybe ceases trading



Flybe has gone into administration.





The Exeter-based airline's final flights touched down at UK airports late on Wednesday evening, after hours of mounting speculation the company looked likely to cease trading. The Virgin-led consortium that was set up to take over Flybe said a drop in bookings because of coronavirus meant the airline was no longer viable.


The GMB union warned that, in addition to Flybe's 2,400 staff, the collapse threatened 1,400 jobs in the supply chain and put the future of regional airports at risk.


A message on the airline's website said Flybe had ceased trading in the early hours of Thursday, March 5, with Ernst and Young appointed administrators.


Customers have been told not to travel to the airport, employees and creditors have been directed to contact the administrators.





The CAA said all Flybe flights, and those operated by Stobart Air, are cancelled and told passengers to 'make alternative travel arrangements via other airlines, rail or coach operators'. 


"For flights operated by Flybe franchise partners (Eastern Airways, and Blue Islands) passengers should make contact with that airline to confirm your travel arrangements," the CAA added.


CAA chief executive Richard Moriarty said: "This is a sad day for UK aviation and we know that Flybe's decision to stop trading will be very distressing for all of its employees and customers.


"We urge passengers planning to fly with this airline not to go to the airport as all Flybe flights are cancelled.  For the latest advice, Flybe customers should visit the CAA website or the CAA's Twitter feed for more information.


"Flybe also operated a number of codeshare partnerships with international airlines.  If you have an international ticket you should make contact with that airline to confirm your travel arrangements."


The airline was acquired a year ago by a consortium headed by Virgin Atlantic, which also included Stobart Group and hedge fund Cyrus Capital. The consortium put in at least £100 million, but Flybe needed more, and the Government agreed in January to a loan, believed to be in the shape of a delay in paying Air Passenger Duty (APD) for three years, worth £100m.


At the time, the then business secretary Andrea Leadsom said the deal would be 'welcome news for Flybe's staff, customers and creditors and we will continue the hard work to ensure a sustainable future'.


The airline warned this week that it needed a decision from the Government about the £100m taxpayers' loan 'in the coming days' or it would not survive until the end of the month.


But it became increasingly apparent the loan was unlikely to be made before the Budget next week. And, according to an FT report on Wednesday, Flybe had not met certain requirements set out by the Government, which looked like delaying the loan further.


The Virgin-led consortium said coronavirus was the last straw for the failing airline.


Despite rumours circulating on social media that the airline's flights were being grounded at some airports, Flybe was still selling tickets up to 10pm last night.


A photo circulating on social media on Wednesday evening appeared to show a detention notice placed on an aircraft at Glasgow Airport, which stated the aircraft was detained until charges outstanding have been settled.


At the same time, ITV Scotland correspondent Peter Smith tweeted a Flybe aircraft had been seized at Glasgow, with staff 'being taken off their aircraft and being told the bad news'.


But Flybe initially responded by saying there had been a 'miscommunication' over refuelling of some services and said: "Normal operations have now resumed."


Nigel Frith, senior market analyst at asktraders.com, said: "The downturn in bookings from the coronavirus outbreak looks to be the final nail in the coffin for the budget airline. The timing couldn't have been worse for Flybe as it waited for the Government to commit to a £100 million loan.


"The collapse will be a blow for Boris Johnson and his plan to improve communications in a post Brexit Britain."


And he warned: "With coronavirus just ramping up in the UK, Flybe could be the first of many businesses which struggle to pull through the expected demand shock over the coming weeks or possibly months as coronavirus spreads."


Unions have expressed dismay that the Government did not step in to save Flybe.

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