Is Flybe on its way back to the skies?!

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If you thought the Flybe story was over, think again.

The Telegraph reported on Sunday that EY, the administrator of Flybe, had opened talks with the Government over the nationalisation of the airline.

This story was denied by EY.  According to a statement given to CityAM:

“At this time, we can confirm that there are no discussions between the joint administrators and government about taking Flybe out of insolvency.  [EY] continues to be open to approaches from all parties in order to realise returns for creditors”.

One of the emergency coronavirus measures announced by the Government last week was a change in the laws relating to company insolvency.  Akin to the US Chapter 11 scheme, it allows companies to continue trading even if they are technically insolvent and is aimed at ensuring that previously healthy businesses should be protected.  Importantly, these changes were backdated to 1st March – and Flybe collapsed on 5th March.

Is Flybe on its way back to the air?!

If the Government chose to acquire Flybe from the administrator, it could immediately rehire (to keep in place) and then furlough staff using the new Coronavirus Job Retention Scheme.  The company would also be able to access some of the emergency funding that has been made available to businesses.

This does, of course, open up a h-u-g-e list of questions:

How much of the old Flybe team could be put back together?  Very few of the staff will have found new jobs yet, I imagine.  How easily can you put an airline back together working from home though?  

I would imagine that the aircraft would be available ….. they won’t have been leased to new operators yet given current demand.

Could the Heathrow slots be taken back from British Airways?

Would a Government-owned Flybe look to compete on those routes which have been taken over by other airlines?  And presumably these were the most profitable ones?

I genuinely struggle to see how this would work.  It would be great if it could, of course, but I am tempted to believe EY when they say that there is no deal under discussion.

One unknown is the position of Loganair and Eastern.  Both are believed to be on the verge of submitting their own requests for state aid.  Could the Government look to bolt these two carriers together, as well as providing finance to pick up more ex-Flybe aircraft and routes?  But if it did, are we not repeating the story of how Flybe was put together in the first place?

The key question, of course, is why the Government would want to help Flybe when it refused point blank just a few weeks ago.  Flybe was also not brought down by coronavirus – the virus was simply the final punch at the end of a multi-round fight.  I think we need to file this one under ‘not going to happen’.

The original story was in the Telegraph but is behind a paywall.   Here are summaries in TTG and CityAM.

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Comments

  1. How well run are government owned airlines normally? I’m not talking about the Middle East where they have unlimited oil money to sink into a passion project of like semi-Singapore Air where the country has enough savings to back it up.
    For a place like the UK, I find it hard when a deficit seems likely for the coming decade and any significant investment would likely be barred.
    RBS was nationalised for a while and I can’t see that it’s improved the “quality” of the bank or the customer experience.
    I’m all for saving jobs but would love to hear some 2 cents from people who know more than me about whether they could make companies better.
    My gut feel is…a U-Turn is happening because ultimately, they’re going to have to bail out the rest of the industry.

    • Finnair is 55% (?) Government owned and they have done exceptionally well in recent years – new A350 fleet, carving out a distinctive niche into Asia etc.

      On the other hand, TAP Portugal has been transformed since it was privatised in 2016 with an entirely new long-haul fleet lauched in the last 12 months and some very aggressive pricing as we’ve covered. Iberia has also been transformed since IAG took it over.

      All of the US airlines are technically underwritten by the Government.

      • Thanks Rob,

        So it is a bit of a mixed bag in terms of whether the quality for the customers actually work.
        Finland isn’t exactly a poor country and just worries me that it’ll just become another elephant in the room or ammo for politics later down the line.

        It is interesting though, and if more become government owned, it’ll also be interesting whether they’d end up consolidating and merging the brands.

  2. Starting some new discussion?
    I’m an Aussie that works in the UK – and my family in Sydney have been sharing the news about people being quarantined in the hotels on state funds (Hilton, Swiss, etc) – they’re obviously not bad hard products but it’s also true that they’re not getting the typically paid 5 star service (let alone being let out).
    A lot of those being kept in isolation are complaining about the facilities and also food, no doubt they are not excellent food being supplied, but what I’m trying to get a better sense of is whether majority of these people have the right to complain. Are most people being sent home and needing quarantine:
    – People who refuse to cancel their holiday plans, and then are stuck?
    – Geniune people helping others and have been stuck?
    – Stuck on a cruise ship and went on the cruise ship knowing about tlhe coronavirus?
    I know the same is happening for people being flown back to the UK as well – I’m not sure whether to feel sympathy for them or not given that most sensible people have cancelled their travel plans at their own cost prior to this.

    Also, a fun note, if you’re stuck at the Hilton, do you think you get the eligible nights benefits? 😛

    Stay safe everyone.

  3. Wilbur says:

    If they do take over the airline will all my flights be re-instated. Lost hundreds of pounds. I have to commute to and from my place of work. No other airline has picked up the routes. I work in construction, at the moment work on to very important nhs projects and it is very difficult to get back home to my family.

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