UK airline Flybe near collapse amid coronavirus-linked fall in demand: source

London: British regional airline Flybe is due to go into administration within hours, a source told Reuters on Wednesday, as the already struggling carrier failed to withstand the plunge in travel demand caused by coronavirus.

Travel has taken a hit from the coronavirus outbreak.Credit:[email protected]

Accounting firm EY will be called in to handle the administration, once Flybe's aircraft are all back on the ground from flying later on Wednesday, said the source familiar with the situation and who spoke on condition of anonymity.

A representative for Flybe declined to comment on the possibility of administration or the airline's longer-term financial situation.

Flybe's failure would put 2000 jobs at risk and cause a headache for Prime Minister Boris Johnson and his plan to boost regional transport links.

Flybe would be among the first airlines to go out of business since the emergence of coronavirus, which surfaced in China last year and has since claimed around 3000 lives and sharply reduced travel demand.

Some major 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 amongst 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 ($141.6 million) since buying Flybe in 2019.

Virgin Atlantic declined to comment on Wednesday, while Stobart and Cyrus were not immediately available.

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

PM Johnson said in January that Flybe was important for Britain'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 Britain beyond London. Without Flybe though, some regional airports like Exeter, Birmingham and Southampton will have much poorer connections within Britain and to Europe.

Flybe's network of routes includes more than half of UK domestic flights outside London. It has 68 aircraft and carries 8 million passengers a year between 71 airports in the UK and Europe.

Reuters

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