Is Flybe The Next European Airline To Collapse?

Not to forget: Skywork (regional airline based in Bern, Switzerland), Small Planet Germany, Poland and soon Lithuania - all about to cease operations or have already ceased.

@ Jay - its an awful year for European airlines!

While not due to financial difficulties, be prepared to say goodbye to Brussels Airlines in 2020 as it merges with Eurowings.

The question is: How much do blog posts like this and rumors contribute to the downfall of such airlines? If you spread these kind of rumors you have a negative impact on the future bookings and this can become a self-fulfilling prophecy for the airline.

Idiotic even by James' low standards. Poorly informed scaremongering. Stick to the luxury cabin reviews, please.

Loved that route from LBA to BFS

“rattly, noisy propeller planes aren’t my favourite mode of transport“

Except that’s not really a good description of a Q400, is it?

The “Q” stands for “quiet”.

Given that BA does not many or any domestic UK routes that are not in or out of London, I would imagine that Flybe's route structure would be quite attractive. And their base at the under-used Exeter airport would be worth something too.

Why they cannot charge credit cards? That seems such a trivial problem that can be resolved easily?

I’ve travelled on Flybe a few times in the UK, mainl between London and Newquay. Perfectly OK, except for some over zealous baggage regulation enforcement and mainly junk food catering.

Flight review here: https://www.2paxfly.com/2016/04/04/fly-me-to-the-moon-or-flybe-to-newquay-but-not-many-stars-to-play-with/

I think your article is a little ‘Henny Penny’. A profit warning, is usually a regulatory requirement. It requires investigative/business journalism skills (which are really outside the metier of this blog) to draw the inference of potential insolvency that you do, but provide little evidence for.

I am confused by this story which seems incomplete. I thought some Flybe routes are flown by Stobart Air as franchisee using Flybe codes. Are you suggesting that those might be at risk too or only those routes which use Flybe aircraft (and, if so, which routes are which)?

Also, why are you suggesting a possible collapse rather than a CVA? For an airline with some strong routes, wouldn't a CVA be more likely if things did deteriorate? Several US airlines have been through Chapter 11 which is similar.

I am *not* suggesting that Flybe is close to collapse, merely highlighting that I think James' post is superficial to the point of being potentially materiallly misleading. It would benefit from substantial expansion.

This article should be removed. Highly irresponsible and dangerous. Suggesting people should if they can move to another airline. That just spreads panic and makes matter worse. Get all the facts correct before you write these type of articles

I’ve flown Flybe a few times. They are fine except for the food which sits well in the ‘junk food’ category. Here is my review of a flight between London and Cornwall: https://www.2paxfly.com/2016/04/04/fly-me-to-the-moon-or-flybe-to-newquay-but-not-many-stars-to-play-with/

I think your story is a little ‘Henny Penny’. Reporting a profit warning is often a statutory obligation. It’s the nature of the loss and the planning around it that would enable an assessment about potential insolvency.

I think financial analysis is outside the metier of this blog, and should be avoided, unless business investigative journalism skills are going to be applied.

@The nice Paul: the "Q" may stand for "quiet", but are Q400s really quiet? Not so much. Let's be honest, they're quieter than, say, an old Brazilia (I loved those things, but that's just me), but not nearly as quiet or comfortable as an E-jet.

@Max Muilero - that's a good point, but on the other hand what is a reporter supposed to do? Not tell his audience there's a potential problem for readers? It's a hard call. I think recommending booking away may still be premature, and if the idea catches on could become a "self-fulling prophecy", but the suggestion to buy flight insurance that covers insolvency for flights in the future is reasonable.

@Bour - CVAs differ significantly from Chapter 11 in the US. The biggest problem seems to be HMRC's attitude and that some creditors can still demand full payment before supplying new product. Here's a good summary with discussion of UK law moving closer to US law:

https://www.begbies-traynorgroup.com/news/cva/comments-on-uk-version-of-chapter-11

Don't forget about VLM Airlines...for the second time.

@Sung- they can no longer collect extra fees when they charge credit cards- this was a source of revenue before.

http://www.thetravelmagazine.net/no-credit-debit-card-fees-europe-2018.html

Can FlyBE sue OMAAT for defamation?

Ben, you need to choose your contributor carefully. Posting this article is irresponsible. I agree with the description “idiotic even by James’ low standards”.

@James generally enjoy your articles but as other posters have said, this is way outside your area of speciality to make these wild claims. Please stick to airline reviews and route news etc, and leave this type of speculation to expert financial commentators.

All in all, five European airlines went down in the past two months. There's really no need to stir up more panic by FUD articles.

@ivan .. 'expert financial commentators'? can you name one? these incredibly talented people that can see the future?

i agree this post is speculation at best (calling 'airline collapse warning' on a profit warning is pretty leftfield) .. but it's no more leftfield than the number of other journalists trying to claim the same thing, or analysts.

FlyBe in the UK is often known as Fly MayBe and that's down to the sheer number of short notice cancellations they used to have before the provisions of EU261 kicked in. Cancelling two out of three services on some routes a day was not unusual and even then the one operating flight was far from full. Now they have to do the sums and see whether they pay compensation for cancellation and delays or operate less than full aircraft.

The Dash 8 is a dog on routes over 30 minutes, it's uncomfortable anyway and I agree, noisy. FlyBe are getting rid of their larger Emb195s and going to replace with more Dash 8s so appeal of the routes operated there drops to zero as we are talking here of routes in excess of two hours.

The main UK domestic routes not touching London are covered by easyJet anyway and they will no doubt pick up slack with a better offering if and when FlyBe go.

I have traveled with Flybe a lot and many of the flights have been very busy.

I think route pruning is likely but I am sure this airline, which has some of the friendliest cabin crew in my experience, will survive in some form. In my uninformed view a prepack administration is the worst that would happen.

Much as I dislike the Q400 they do seem well suited to many of the routes they fly.

@Vand Richard Quest at CNN is one journalist that springs to mind who takes a keen interest in the airline sector. Can’t imagine him making such claims without doing some proper research and analysis first. I doubt James even called the PR Department of Flybe for further comment on the profit warning before publishing this article.

James should stick to articles which is the reason why we read this blog and where he can add value, airline and hotel reviews, airline route news and best uses and ways to accumulate points/miles for premium cabin and hotel redemptions.

I don't think it's fair on the airline, its customers, staff and shareholders to put 'pub talk' on line like this. Publishing this type of article with such a clickbait headline means that it's more likely to become a self fulfilling prophecy.

This does seem a bit premature a profit warning is totally different that an airline being close to insolvency, and this article mentions nothing about their cash reserves or cashflow situation.

As others have mentioned the ‘bones’ of their route structure are a lot more attractive than a half-baked low-cost expansion like Primera so I doubt they would ever go under that quickly without finding new investors.

Let's all give James a break, shall we? We don't come to OMAAT for in-depth financial analysis. We come for great trip reviews and tips about how best to accumulate points and redeem them for premium cabin travel.

For those interested in flybe's financial health, let's not be guided solely by share price. The 40% drop in the share price is disconcerting, but how much cash does the company have on hand? How much of its credit facilities are available? If I remember correctly, Primera ceased operations because it was unable to secure additional debt to fund operations.

If ya'll feel James' article is contributing to FlyBe's potential demise, then surely it proves they're clearly in a fragile state? Would such an article have the same effect on Qatar for example? Madness.

This article is highly inappropriate and blog posts like this can cause perfectly viable companies to fail and people lose their jobs.

As a companies specialist, profit warnings are perfectly normal in the market. The reason for the 40% drop could be in part attributed the global drop in stocks over the past week, driven by trade sanctions/concern at the American mid terms/China/Saudi Arabia etc.

This isn't the first time James has written something idiotic. Maybe its time Lucky reviewed the quality of his contributors!

I agree - highly idiotic and irresponsible words - better just stick to commenting on cabin crew clothing.

The most important factor for airline solvency is cash flow. Flybe's financials are certainly not healthy, but they're also nothing approaching insolvent: https://www.marketwatch.com/investing/stock/flyb/financials/cash-flow

It’s not irresponsible to have an opinion, this is a blog after all (OMAAT has never claimed to be CNN). Let’s stop trying to insist what people can or can’t write.

When alarming advice is given under bold headlines on "What to do if you are booked on a Flybe flight" then that may have adverse implications for a company and it's employees and so goes a little bit further than simply "having an opinion" and, I maintain, as many others have commented, that this is recklessly irresponsible.

@Ben,

The majority of commentators are right; it is irresponsible to suggest that an airline is about to fold, just because it issued a mandatory (as required by UK legislation) profits-warning. James was wrong to do so, and you are wrong to defend his partially Informed speculation.

Agree with the many comments that this is at best irresponsible and, subjectively, idiotic.

Brings to mind those who made similar claims about Qantas a few years back when it made losses, and its share price was hence down. And look where it - and its share price - is now...

If Flybe goes I'll be sad because until recently I lived close to London City Airport and I love seeing the incredibly unique purple livery which is so unappreciated. But if Flybe does bid a sad farewell I bet IAG will swoop in and acquire the remnants of Flybe and so we will probably see BA cityflyer expand.

Flybe operate feeder flights from UK regional airports that connect to international airlines operating out of CDG, Schiphol and other important European hubs. They provide an all-economy service where basic service (food must be purchased) good seat-pitch, padding and comfort is assured. They are providing an excellent and well priced product to the community and should never have their operations be jeopardised by foolish words from an inexperienced, incompetent and irresponsible self-appointed “airline analysis expert”.

Had a nice flight on Cobalt last year but nothing stood out.

Skywork had different issues and Bern alone wasn't going to be able to sustain this little airline.

Flying is way too cheap in Europe and that is going to change in 2019. Meanwhile Ryanair still has €9.99 flights from Eastern Europe to Aqaba, Jordan

@ Ben

Unfortunately, you are wrong.

This is not an opinion piece nor billed as such.

It provides direct advice to readers that it would be prudent to change to another carrier if financially feasible.

The problem is that:

1) The article focuses on share price (useful if you're an investor), not business financial fundamentals (such as cash flow), as a warning to "collapse", exposing the writer's ignorance on matters of business viability

2) The writer hasn't bothered to do any actual research and then report in an unbiased fashion on those financial fundamentals (in any case the current actual data aside from a profit warning aren't available until 14 Number 2018 when the half year results are made public).

3) Therefore the advice is unsubstantiated

For example a few minutes of Internet investigation produces:

From Ian Milne, CFO 18 June 2018 (annual report):

"...The directors have assessed Flybe’s viability over a three- year period to March 2021. While the Board believes that the Company will be viable over a longer period, three years is the period considered most appropriate to form a reasonable expectation of the Company’s viability. This period is supported by the three-year business plan enabling the forecasting assumptions to be aligned....

...Flybe had free cash balances of £86.7m at 31st March 2018...

...Having considered the forecasts, the downside case and potential mitigating actions along with making other enquiries, the directors have a reasonable expectation that Flybe has adequate resources to continue in operational existence for the foreseeable future..."

Subsequently...profit warning issued 17 October 2018 (prediction of pre-tax GBP22 million annual loss, which led to the share decline) in anticipation of the announcement of half year results on 14 November 2018.

@ James is acting unprofessionally and irresponsibly. Again.

@James I'm adding my voice to those who say this article is both misinformed and irresponsible.

If you wanted to run an article on backup plans when flying with an airline in difficulty you could have properly researched those that failed in the last couple of months and then used them as examples.

This kind of article makes you look very silly, in case you didn't notice.

@Platy well said. @James, I feel this is part of a pattern of poorly researched (or perhaps not researched at all) articles. @Lucky , would you intervene?!

@ James

Imitation is the sincerest form of flattery, as the saying goes...

There is a remarkable similitude between the content and structure of this article and the one on the "Simple Flying" website of virtually the same title.

Coincidence or flattery (whilst noting that your IMAAT article appears to have been published first).

I noticed another such case of "flattery" between IMAAT and AusBT on the issue of the Thai Airways schedule changes on their Australian services.

Let's go with the Oscar Wilde version of the saying in anticipation of a simple explanation and a wink of humour:

"Imitation is the sincerest form of flattery that mediocrity can pay to greatness".

@ James

FWIW I'd LOVE to read about your tips and insights derived from your extensive travels (currently Morocco?) wherein you can write with authority from your own personal experience!

Inspire the reader to make that trip and point the way forwards!

@ Platy -- my 'Impressions of Morocco' post has already been written, and should be published tomorrow : )

Thanks for bringing that Simple Flying blog to my attention -- I had never heard of it before now, and confirm that my post was written before theirs was. Other blogs don't get the level of scrutiny that OMAAT does. The similarities were quite noticeable!

I loved flying with them from Southampton airport. The staff open the departure room door and you walk max 50 meters to the plane. And from the train to actually being in the departure lounge is 10 minutes. That sure beats the struggle to get through the main London Airports. I’m sure they will be around a lot longer -even AT&T lost 8% of it’s share price yesterday after its worst performance in 16 years. And they will be around for ever

Sorry James, but that's a very amateurish report on so many levels. Not up to OMAAT standards.
Stick to what you really know about, like.....erm…….

@Platy: You seem to think that because the CFO produced a spreadsheet three months ago showing everything hunky-dory that the company could not be in trouble.
That is not independent evidence and so should be given very little weight.

@Platy
Where does the article suggest changing carrier?
I read that it recommends having insurance in place, and checking that the terms of the insurance cover a type of event which has recently happened several times in the sector (so possibly changing insurer)
That seems prudent.

I wish more LCCs & ULCCs go bust. It’s so sad to see how they shuttle chavs on stag dos across Europe, ruining great cities like Prague, Budapest & Riga.

Stobart Air are waiting in the background to pick up the pieces should they fail.
I have used them many times and I lIke them.....not cheap but great for internal flights within the UK.

In order to know your rights, while flying with Flybe examine this guide:
https://medium.com/@traveld/flybe-flight-delay-compensation-guidelines-on-how-to-claim-a-refund-e511eb181c9f

https://www.bloomberg.com/news/articles/2018-11-14/flybe-in-takeover-talks-as-rising-oil-price-weighs-on-profit

I will put my two cents worth in. I fly every week and for 2 years I flew Flybe as I was sick of Heathrow. If you think a Q400 is quiet it is anything but. Try row 3 for 1hr 40 minutes and you will see what I mean. I moved to the back where it was quieter but still shook the fillings out of your teeth. If Flybe go belly up, then it is because of really poor management. I got sick of making complaints. I wrote more complaints in two years than in the previous 15. This is/was an airline that preyed on its customers with hidden fees at every turn and truly awful customer service. On one flight, apart from bussing us to another airport, when we finally departed we were informed that we would be going to Exeter, instead of Southampton. We landed at 0330 and the busses to Southampton departed at 0530 arriving in Southampton at 0830. At no time we we offered any food or drink. I had to remind Flybe of there obligations under EU261 which they ignored. I was told in Southampton that they did not hold a copy of EU261 as it was too big. Yes that was the response. I pricked their bubble when I produced the document on my computer.
That was the last time I flew with Flybe and I wished them a speedy bankruptcy. Ghastly airline and not surprising that many regular flyers moved on like i did. It was the straw that broke the camel's back. The excuse of not being able to charge credit card fees does not wash.