UK airline Flybe goes into administration as virus hurts demand

The United Kingdom’s regional airline Flybe said early on Thursday it entered into administration, as the already struggling carrier failed to withstand the plunge in travel demand caused by the coronavirus.

“All flights have been grounded and the UK business has ceased trading with immediate effect,” the airline said, adding that accounting firm EY had been called in to handle the administration, a form of creditor protection.

The airline’s failure puts 2,000 jobs at risk and has caused a headache for Prime Minister Boris Johnson and his plan to boost regional transport links.

A UK government spokesman said the government was working closely with the airline industry to reduce any disruption to routes operated by Flybe.

Flybe is one of the first airlines to go out of business since the emergence of coronavirus, which surfaced in China last year and has since killed about 3,000 people and sharply reduced travel demand.

Some of the world’s biggest airlines have said they will need to cut costs to weather the downturn in bookings, particularly since late February when Europe‘s worst outbreak emerged in Italy.

British Airways, easyJet, Lufthansa and United Airlines are among those announcing cost-saving measures.

Flybe was already in financial trouble before coronavirus hit.

The airline, which connects smaller UK cities, was rescued from near-collapse in mid-January, when shareholders agreed to invest more money alongside UK government support for the airline.

Flybe’s current owners are Connect Airways, a consortium created by Virgin Atlantic, Stobart Group and Cyrus Capital. The group have invested 110 million pounds ($141.6m) since buying Flybe in 2019.

Stobart did not respond to a request for comment. Virgin Atlantic and Cyrus could not immediately be reached.

Up in the air

Flybe had been pinning hopes for survival on a government loan plus a reduction in air passenger duty, a tax charged by the UK on flights, but help did not come in time, meaning that its regional routes in the UK are now at risk.

Prime Minister Johnson said in January that Flybe was important for the UK’s transport links and that the government would do what it could to help the carrier.

His government has a plan to try to boost regions of the UK beyond London. Without Flybe though, some regional airports like Exeter, Birmingham and Southampton will have much poorer connections within the UK and to Europe.

Flybe’s network of routes includes more than half of UK domestic flights outside London. It had 68 aircraft and carried eight million passengers a year between 71 airports in the UK and Europe.