Update: In early March 2020, Flybe ceased operations.
Well, it looks like Europe’s largest regional airline is on the brink of collapse yet again, despite them recently being acquired by a group that includes Virgin Atlantic.
In this post:
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.
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 on brink of collapse again
Sky News is reporting that Flybe is trying to secure additional funding amid huge losses. Accounting firm EY has been put on standby to handle the administration of the airline.
According to the story, the UK’s Department for Transport and Department for Business, Energy, and Industrial Strategy, have been briefed, and are working on determining whether the government could provide any emergency financing for the company.
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. So the airline has already blown through at least £20m.
As of now, the only statement that the airline has issued is as follows:
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.
Bottom line
It would appear that Flybe is on the verge of entering administration for the second time in about a year.
While I understand how the concept of acquiring Flybe was attractive to Virgin Atlantic, if the airline has blown through tens of millions of pounds in the past year, you sure have to wonder what exactly they’re hoping to accomplish.
While a regional route network would be helpful to Virgin Atlantic, it’s questionable if the business model could be profitable anytime soon.
The other issue is the slow pace at which Flybe’s operations have at all been aligned with Virgin Atlantic. The airline is supposed to rebrand as Virgin Connect sometime in 2020, as the focus up until now has been on improving the performance of the airline. It seems like that hasn’t been working out too well, though.
This should be an interesting one to watch…
(Featured image courtesy of Riik@mctr)
Red_robbo, you are exactly right.
Connect airways never really wanted to make a go of Flybe.
They asset stripped the airline when Flybe plc’s assets were sold to connect airways for a knock down price (£2.8m) back in early 2019.
The assets including owned aircraft, valuable slot at Heathrow, Paris, Amsterdam etc plus other assets which were worth multiple times the purchase price.
Yes they put in a relativly small amount...
Red_robbo, you are exactly right.
Connect airways never really wanted to make a go of Flybe.
They asset stripped the airline when Flybe plc’s assets were sold to connect airways for a knock down price (£2.8m) back in early 2019.
The assets including owned aircraft, valuable slot at Heathrow, Paris, Amsterdam etc plus other assets which were worth multiple times the purchase price.
Yes they put in a relativly small amount of money to keep the airline ticking over but did very little to solve the airlines problems of overstaffing and control of loss making routes.
So connect have now pulled the plug putting 2,300 people out of work leaving the the connect consortium to walk away with a nice profit from sale of the assets they acquired for a knock down price.
This is just a case of asset stripping for a quick profit.
The 3 owners of connect airways will be quite pleased with their return from this venture.
Let's face it, Virgin were never really in the slightest bit interested in any Flybe routes other than those into LHR, which could eventually be sold for megabucks should they (again) be unsuccessful as feeders to their longhaul services. Routes like Exeter or Southampton to Glasgow or Edinburgh? Probably always planning to offload them as soon as possible....
Call me a cynic, but what they're no doubt hoping for now is that Flybe do...
Let's face it, Virgin were never really in the slightest bit interested in any Flybe routes other than those into LHR, which could eventually be sold for megabucks should they (again) be unsuccessful as feeders to their longhaul services. Routes like Exeter or Southampton to Glasgow or Edinburgh? Probably always planning to offload them as soon as possible....
Call me a cynic, but what they're no doubt hoping for now is that Flybe do go down the pan, and they'll play the hero and magnanimously agree to soldier on with the LHR routes. Effectively nothing but asset stripping, without all the inherent bad publicity they would have received had they pulled out of the other routes in a season or two's time.
Despite the presence of the "EU3", Europe's airline market has remained considerably fragmented and apparently unsustainable. Whether the market is slowly self-correcting itself by way of natural belly-ups might be a matter of viewpoint, but it would certainly be better to have planned consolidation taking place rather than airlines dying at a rate of one per month, leaving passengers suddenly stranded and governments left to pick up the costs of pax repatriation. Not to mention,...
Despite the presence of the "EU3", Europe's airline market has remained considerably fragmented and apparently unsustainable. Whether the market is slowly self-correcting itself by way of natural belly-ups might be a matter of viewpoint, but it would certainly be better to have planned consolidation taking place rather than airlines dying at a rate of one per month, leaving passengers suddenly stranded and governments left to pick up the costs of pax repatriation. Not to mention, staff jobless overnight.
After the consolidation of mainline carriers in the US in the past decade, and the stability and sustainability that this has brought to consumers as well as investors, I've come around to viewing the airline industry as a natural oligopoly. It takes a great deal of scale and critical mass in order to run a meaningful and sustainable network of air services, and - short of large scale government subsidies - those factors are the only way for airlines to be able to continually reinvest in fleet, product, and infrastructure.
Mike:
Yeah, I could definitely see that level of disorganization, misinformation and poor customer service occurring, based of my experiences with them in the last week. The slogan they paint on the side of their planes is "Faster than road or rail." That is not exactly aspirational.
I do not know how they could be profitable, at least on their London routes. They fly out of Heathrow, but their prices are more in line with...
Mike:
Yeah, I could definitely see that level of disorganization, misinformation and poor customer service occurring, based of my experiences with them in the last week. The slogan they paint on the side of their planes is "Faster than road or rail." That is not exactly aspirational.
I do not know how they could be profitable, at least on their London routes. They fly out of Heathrow, but their prices are more in line with Easyjet/Ryanair, as is their service. And my flight yesterday was about a third full.
After my one (and only) experience with Flybe last month, they deserve to go out of business - I purchased a ticket that allows same-day changes (paying more than $40 extra for the ticket) and tried to take advantage of said offer on the day of my flight.
When I got to the airport, they told me that, no, I hadn't purchased that ticket, and tried to charge me nearly $50 to change the ticket...
After my one (and only) experience with Flybe last month, they deserve to go out of business - I purchased a ticket that allows same-day changes (paying more than $40 extra for the ticket) and tried to take advantage of said offer on the day of my flight.
When I got to the airport, they told me that, no, I hadn't purchased that ticket, and tried to charge me nearly $50 to change the ticket that day. After more than an hour, they finally made the change to the ticket for free, but the fact that I had to go through that much hassle for something that I paid for in the first place shows just how dishonest they are.
I hope Flybe’s operations has gone well this 2020. And Mr. Lucky! If you are reading this. Then I would like to say love from Nepal.
Having flown Flybe twice in the last week, I can definitely say alignment with VS seems non-existent at this point.
On Thursday I flew them from LHR-EDI. On Google flights I saw that tickets could be purchased from VS, and prices listed to buy through VS were less than buying from Flybe directly. However, when trying to click the link to buy, I got a message saying that the ticket had just went up in...
Having flown Flybe twice in the last week, I can definitely say alignment with VS seems non-existent at this point.
On Thursday I flew them from LHR-EDI. On Google flights I saw that tickets could be purchased from VS, and prices listed to buy through VS were less than buying from Flybe directly. However, when trying to click the link to buy, I got a message saying that the ticket had just went up in price. I tried a couple times over the next few days--always to the same result. Somehow there is a disconnect between the price listed on Google and the actual price VS is charging. Plus there is no way to get VS miles for Flybe flights at this point.
Yesterday Delta ended up rerouting me on a combined Flybe (VS codeshare) and VS routing. Transferring from the Flybe flight in LHR terminal 2 to the VS flight in terminal 3 was time consuming and slightly painful, with air traffic delays, bus gates, shuttle transfer, reclearing security, etc.
Well, looks like Italy’s Ernest Airlines beat them for the title of First European Airline To Go Belly-Up In 2020...
Only $20M was injected as cash by the new consortium to help run the business over the winter with $80M earmarked for future investments.