BREAKING: Is Flybe on the verge of administration (again)?

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Sky News reported very late last night that Flybe is believed to be on the brink of administration.

Regular readers will know that Flybe was acquired last year for, virtually, nothing (£2m) by a consortium of Virgin Atlantic, Stobart Air and private equity group Cyrus Capital.

Flybe going into administration

In the Autumn, the airline announced that it would rebrand itself as Virgin Connect.  I was the only member of the media invited to the event which unveiled the new name and strategy (I chaired a panel discussion) and there was a real sense of optimism and enthusiasm from the new CEO Mark Anderson and his team.

Substantial changes were announced to its route network, which would effectively have seen it move away from the price-concious leisure market and focus on business and ‘visiting friends and family’ routes.

The three new shareholders had agreed to inject £100m into the airline.  If the story last night is correct, this has not been enough to see it through the difficult Winter period when revenues are at their lowest.

Flybe goes bust

It was stated that advisory group EY (I don’t mean Etihad!) had been put in place to handle the administration of the airline if additional funding could not be secured.  The Government was also believed to be involved in talks about providing a credit line to the business.  Whilst Virgin Atlantic has relatively deep pockets – albeit with a desire not to throw good money after bad – I can imagine that Stobart Air and Cyrus Capital may have wanted to draw a line.

(There was a plan to inject Stobart Air’s existing airline operations into Virgin Connect – I’m not sure if this was in lieu of injecting cash into the new venture.  I don’t know if this actually took place or not.  It would be bad news if Stobart Air also went under.)

Flybe released a short statement early on Monday saying:

“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 rumor or speculation.”

I expect we will hear more about this during Monday …..

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Comments

  1. No real details yet, but Andrea Leadsom (who’s now Secretary of State for Business, Energy and Industrial Strategy) has just tweeted: “Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that U.K. regions remain connected. This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.”

  2. Steve in Croydon says:

    Just heard that FlyBe has been “rescued”. I don’t hold out much hope. The past couple of days I’ve received two emails about their JanYayRy sale, both emails fail to format correctly (I’m running a fast PC on W10 with everything up-to-date).
    Then there’s their website booking engine – it actually makes ba.com look good – and that’s quite an achievement! Absolutely horrible – why offer me a three-legged trip LCY-AMS?? The summary price is wrong and finding the calendar of prices is damned difficult. Then there’s the prices – even BA can beat them.
    I have worked in IT for 35+ years, this website is one of the worst I’ve seen. I suspect many potential customers just give up and walk away.

  3. The patient is alive and well reportedly – just received a jolly email from them:

    https://twitter.com/win_and_fly/status/1217155567262679041

  4. It has been reported that the government will allow Flybe time to pay its tax debt, but how can Flybe have an APD debt topping £100m? per the BBC here: https://www.bbc.co.uk/news/business-51113895

    As I understand it, Flybe carries about 8 million passengers a year, and I think all of their destinations are in band A (Europe and Maghreb, essentially). I doubt their seat pitch is over 40 inches so they should all be in the £13 per passenger rate. The tax is payable monthly, but that would be approaching 12 months worth. Have they paid over no APD for a whole year?

    (And can I have the same deferred payment terms for my income tax please.)

  5. Steve in Croydon says:

    I had the same thought as Andrew’s post above. Where is this £100m and how has HMRC allowed it to mount up when regular remittances are required? Is FlyBe actually sitting on the £100m in the bank and will just burn through it in the next few months? Or have they already burnt through it? Either way, I suspect HMRC won’t get the money and they will be the number one creditor when the company fails. No other creditor will get a look-in. Would you trade with a company in such a position? Answer: no, unless payment is received up front.

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