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Flybe near collapse - what went wrong for the airline?

Flybe near collapse - what went wrong for the airline?

The UK's largest domestic airline, Flybe is set to collapse into administration in the early hours of Thursday morning, The Speaker understands.

If confirmed, the collapse of Flybe would represent the third major airline collapse in the UK since 2017. In 2017, Monarch Airlines collapsed, while Thomas Cook, which was the UK's oldest travel agent, collapsed just last year. 2,500 staff are employed by Flybe, and these jobs now look under serious threat. 

Earlier on Wednesday, it was reported that the airline could collapse within days and that it had requested that the government consider a request for a £100m taxpayers' loan. On Wednesday evening, reports emerged that attempts to secure funding had failed and that the airline was expected to collapse within hours.

 

Why Is The Airline On The Verge Of Collapse?

The airline was previously on the verge of collapse in January but was rescued by a government loan. But why is the airline now on the verge of collapse again?

It is understood that the airline has suffered from a general fall in demand for air travel amid the Coronavirus outbreak. There are now over 80 cases of COVID-19 in the UK, while there are over 95,000 cases and over 3,200 deaths worldwide.

While experiencing significant successes in the 1980s and 90s, the airline has faced some challenging times in the last two decades. Some key indications of problems came in 2008 when the airline advertised for 'actors' to fly between Norwich Airport and Dublin in order to try and boost passenger numbers and avoid fines, and in 2016 when the airline's CEO Saad Hammad left the company with immediate effect. In 2010, the company was valued at approximately £215 million as it floated on the London Stock Exchange, but in 2018 the shares of the airline fell by 75%.

The airline was taken over by a Connect Airways consortium, including Virgin Atlantic and Stobart Aviation in 2019 and Flybe had been due to be rebranded to Virgin Connect in 2020.

Flybe blamed its sale on a mixture of rising costs, uncertainty related to Brexit and currency volatility. The collapse of the airline could be attributed to multiple factors - the falling demand for Flybe's routes, particularly amid the Coronavirus outbreak can be partially blamed, but so could some other market conditions including uncertainty as a result of Brexit, amongst other factors

 

What Impact Could The Airline's Collapse Have?

Flybe currently carries around 8 million passengers a year between 81 different airports. The airline was founded 40 years ago in 1979 is one of the UK's best-known airline brands. The airline has hubs in Birmingham, Manchester and Exeter and has a fleet of 74 aircraft.

The collapse of the airline could see the loss of other 2000 jobs. The collapse would also have serious implications for many regional airports, including Anglesey, Southampton, Belfast City, Exeter, Newquay, Wick, Jersey and Cardiff, for which the airline represented over half of each airport's departures in 2019.

 

Photo Credit: EDDIE via Flickr under licence (CC BY-ND 2.0)

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