Flybe (“Virgin Connect”) Ceases Operations

Filed Under: Other Airlines

Europe’s largest regional airline ceased operations last night, after a very long fight for survival, which even included an acquisition by Virgin Atlantic.

Flybe was purchased in early 2019

Flybe is a British regional airline, and until early 2019, it was the largest independent regional airline in Europe. Flybe has a fleet of about 75 aircraft, including about 60 turboprops and about 15 Embraer jets.

Flybe was struggling financially (as has been the case for so many airlines in Europe), and at the beginning of 2019 the airline was purchased by the Connect Airways consortium, backed by Virgin Atlantic and Stobart Aviation. The airline was purchased for next to nothing (in airline terms) — around £2m.

When Flybe was taken over, the Connect Airways consortium promised to inject £100m into the airline. That included £20m to support the immediate operations, and a further £80m to be invested in the future.

The plan was for Flybe to rebrand as Virgin Connect, given that Virgin Atlantic has long struggled with the regional market. The airline had tried their hand at operating select regional routes back in 2013 with “Virgin Atlantic Little Red,” but the concept didn’t work out, and was discontinued within a couple of years.

Flybe was still on the brink of collapse

At the beginning of this year there started to be stories about how Flybe was looking to secure additional funding amid huge losses.

Several weeks ago the UK government said they were looking at options for a rescue plan, though nothing ended up coming of this. The coronavirus outbreak seems to have been the nail in the coffin for the airline.

Winter is already a tough time of year for regional airlines in Europe, so when you add in reduced demand from coronavirus, the airline was in an even tougher situation.

Flybe posted the following notice on their website:

Flybe entered Administration on 5 March 2020 and Alan Hudson, Joanne Robinson, Lucy Winterborne and Simon Edel of EY have been appointed as Joint Administrators.

All flights have been grounded and the UK business has ceased trading with immediate effect.

Those with tickets on Flybe are of course being advised not to go to the airport, and to make alternative plans. There are email addresses listed for employees, creditors, suppliers, and media, all of which are EY emails (Ernst & Young, not Etihad).

Virgin Atlantic issued the following statement about the situation, given their involvement with the airline:

“We are deeply disappointed that Flybe has been unable to secure a viable basis for its continuing operations and has therefore entered administration.

Virgin Atlantic, along with Stobart Group and Cyrus Capital Partners, formed the Connect Airways consortium which intervened in 2019 to prevent the collapse of Flybe and keep Europe’s largest regional airline flying. With customers and staff at the front of our minds, over the past 14 months the consortium has invested more than £135m to keep the airline flying for an extra year, maintaining 2,400 people in employment and ensuring customers could keep traveling. This amount includes approximately £25 million of the £30 million committed in January 2020, alongside a Time to Pay arrangement with HM Treasury for Air Passenger Duty to the value of £3.8 million.

Sadly, despite the efforts of all involved to turn the airline around, not least the people of Flybe, the impact of COVID-19 on Flybe’s trading means that the consortium can no longer commit to continued financial support.”

Bottom line

It’s sad to see Flybe go out of business, especially given that they operated unique routes that didn’t otherwise have much service.

Virgin Atlantic sure isn’t having much luck with launching regional operations — first Virgin Atlantic Little Red didn’t work out, and now the Virgin Connect concept failed before the rebranding even happened.

While coronavirus is partly being blamed here, the reality is that the airline was on the brink of collapse before the outbreak started, so I think that may have just caused the inevitable to happen sooner rather than later.

(Featured image courtesy of [email protected])

Comments
  1. Nothing to do with Corona, as BE were bleeding cash for ages. Hopefully the profitable routes will be taken over by others (Loganair? Eastern Airways? Aurigny?), and hopefully they will have jobs on offer for former BE employees.

  2. That has indeed been long in the making. It’s sad, but we will see if the UK government now subsidises another airline for the routes which were subsidised for BE. Stobart might chip in for a few of them (Barra springs to mind)

  3. Sad but inevitable.

    I have flown with them many times and they tended to have very good staff who I have a lot of sympathy for.

    However, on routes with competition they would not be my first choice as most of their planes were horrible Q400s and they were never that cheap or reliable

    For any cabin crew looking for new jobs I understand that several UK train operators are looking for on board staff right now.

  4. Corona will be used as an excuse for laying off employees or getting rid of unprofitable business parts by many corporations.

  5. There was talk of IAG taking over Flybe before Virgin did. Would it be possible for IAG to step in and take over Flybe the way it did with BMI?

  6. They were facing doom before Corona even appeared. This should also leave a neat gap for Aer Lingus Regional to jump for some of the routes in particular ex BHD perhaps.

  7. What happens to their Heathrow slots now? Does Virgin get them automatically? If so, you have to wonder if that’s what Virgin wanted all along… Just let them fail and get all of FlyBe AMS, CDG, and LHR times/slots.

  8. Waiting at Schiphol’s gate C11 yesterday for my KLM flight to Toulouse, I watched a Flybe Dash-8 depart from one of the D gates, with no idea I was seeing one of the last-ever Flybe departures… Very sad.

  9. This reminds me of that meme, “Don’t blame the holidays – you were fat in August.” Everybody’s blaming Corona for everything now…

  10. @Stanley – why are turboprops “outdated”? They are more efficient on shorter flights than “pure” jets of the same size.

    Shame about Flybe – I flew them between Exeter and Edinburgh and was very satisfied with the onboard experience. (Exeter Airport, not so much.)

  11. This could be the ideal scenario for Virgin because they can now buy the parts of Flybe they were interested in whilst leaving out the unnecessary parts. Virgin were only interested in the parts of Flybe that linked into Heathrow and Manchester. So they’ll probably buy those and ignore the more obscure regional routes. Although if the deal is good enough IAG might be tempted into buying parts of Flybe in order to protect themselves against Virgin making another attempt at the short haul market.

  12. This is something that has been on the cards for sometime unfortunately – but the removal of FlyBe rips a huge hole out of regional flying in the UK – and it is hard to see how or where anyone else will fill that hole. It’s very different from the failure of Thomas Cook Airlines last year – it may not get the publicity and drama of “165,000 stranded holidaymakers” but the failure of Thomas Cook was barely a ripple in it’s segment, which has already been replaced – FlyBe pretty much was the segment.

    I’ll miss them – they were convenient, pretty reliable and provided a good service.

    From my local airport I have (or had) a choice of direct flights to 25 regional airports within the UK – of those 5 are the various London airports and of the other 20 – 8 were served only by FlyBe. And for some of these routes flying was by far the best option – the last few flights on FlyBe I took were to Exeter – there is a direct rail service – 7 1/2 hours – and driving is probably the best part of 8 hours.

    There doesn’t seem to be anyone else interested in taking up these sort of routes – maybe some additional connectivity via London may appear, that’s assuming the airports can survive without FlyBe. If FlyBe couldn’t make money on the routes with the correct sized aircraft it’s difficult to see how people like Easyjet/Ryanair could with even bigger ones.

  13. We are currently in Florida, Flew with virgin Atlantic from Manchester,We we’re ment to be flying back to Edinburgh on flybe from Manchester on Saturday 14th of March,We are totally in the dark, What we will do on arrival back in Manchester.

  14. I agree with the folks saying that Flybe was bleeding cash and would be in financial trouble regardless, but I do think the Coronavirus-excuse does have some legitimacy here. VX is having a 40% drop in demand right now, and they’re freezing hiring and reducing exec pay. In another scenario, especially with VX’s recent resurgence, they might have been able to keep propping Flybe up until they could complete the rebrand, but because of their now-risky financial situation themselves, they can’t.

  15. I feel badly for the staff that lost their jobs today as a result of this; however, after my one and only experience with Flybe (in which they charged me an extra 30 quid for a flexible ticket, but didn’t actually give me said ticket), I can’t say I am sad or surprised that the airline went under.

  16. @Brian
    The harsh reality is that you will need to buy a new ticket/make alternative transport arrangements. Your Flybe tickets are worthless, sadly, unless you have travel insurance covering this contingency.

  17. Loganair already snapped up the routes that make sense for them-and will employ staff(and planes?) from Flybe on them.
    Other carriers will do same.
    The unprofitable at any price routes shall disappear.
    Unless the govt steps in with subsidy , but as there are many more demands on govt (taxpayer) aid that the public supports-don’t hold your breath.

  18. Virgin Atlantic apparently advised Flybe on Tuesday evening that it was unable to provide further support to the airline due to the impact of Coronavirus on its own bookings. Also, Flybe had just £5.7m of cash reserves but owed creditors more than £10m by today.

    It’s come to light that HMRC sought to wind-up the airline in January due to unpaid APD of £5.8m and a tax penalty of £844k.

  19. @Brian

    You can get a direct Transpennine train from Manchester Airport to Edinburgh, it’s not bad at all. If you look now you can probably get reasonably cheap advance tickets just in case insurance or compensation won’t cover you.

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