Flybe has remained silent in regards to reports that suggest the struggling regional carrier has been in survival talks to avoid a financial collapse.
Sky News has reported that the airline’s bosses were in talks on Sunday night to secure a rescue deal amid continued losses. According to the report, industry sources say accountancy firm EY has been put on standby to handle the administration process, and the government has been briefed on the situation.
Emergency financing from the government is reportedly being considered by the Department for Transport and the Department for Business, Energy and Industrial Strategy.
Flybe released a statement on Twitter, saying only: “Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don’t comment on rumour or speculation.”
The Exeter-based carrier connects multiple cities in the UK, operating around 75 aircraft with more than 2,000 staff.
The rumour comes less than a year after Flybe’s operating assets were acquired by Connect Airways, which is jointly owned by Virgin Atlantic, Stobart Group and Cyrus Capital, for £2.8 million. That deal initially faced backlash from shareholders, who threatened to block the sale, but it was eventually approved in March 2019.
It was announced in October that the airline would be rebranded as Virgin Connect this year, with a £100 million contribution to its turn-around plan agreed.
However, Sky News reports that insiders said the conditions of the deal had become more “onerous”, potentially leaving Flybe in the edge of insolvency.
If the carrier goes into administration, it would be another huge blow to the UK travel industry following the collapse of Thomas Cook in September.
Commenting on the rumour, professor Loizos Heracleous, an aviation industry expert from Warwick Business School, said: “Reports that Flybe is seeking a fresh recue deal come in the wake of numerous European airline failures, including Air Berlin, Monarch, Flybmi and holiday firm Thomas Book. Attracting new finance will be no easy task. The aviation industry is an unattractive industry in terms of performance and returns on investment at the best of times. It is saddled with high-cost assets, namely planes, and key costs that fluctuate uncontrollably, mainly fuel, which accounts for around a third of total airline costs…
“There will undoubtedly be more bankruptcies. For example, in 2017 we saw 79 new airlines enter the market, while 25 went bankrupt. The failure rate was even higher in Europe, where 29 airlines were started and 14 went bankrupt. In the medium to long term, the European aviation industry may move towards higher levels of consolidation where the weakest players get weeded out or taken over.”