Flybe collapses after ‘pressure’ from coronavirus with 2,000 jobs at risk
Flybe has gone into administration in a crushing blow to its 2,000 workers and thousands living in remote communities across the UK.
Chief executive Mark Anderson confirmed the news in an email to staff late last night – adding it was with "enormous sadness" that the company could no longer continue.
At around 3am it was confirmed Europe's largest regional airline ceased trading with immediate effect.
Ministers will face urgent questions in the Commons this morning over the collapse – which came weeks after a controversial bailout for Flybe due to its vital link to islands and hard-to-reach regions in the UK.
The government today vowed Jobcentres would work with Flybe's staff to find them new jobs. Transport Secretary Grant Shapps – who called the collapse "very sad" – said the government was writing to coach and train firms to ensure stranded passengers get home.
But Unite said it was "outrageous" the government failed to "learn the lessons" from other airline collapses like Thomas Cook and Monarch.
Labour MP Ben Bradshaw, whose constituency includes Exeter Airport, said ministers "broke their promise" to help Flybe by "failing" to reform Air Passenger Duty quickly enough. He added: "Johnson's mantra of 'levelling up' our left behind regions lies in tatters. Lost connectivity & the future of many regional airlines at risk."
Tory minister Edward Argar tried to wash the government's hands of blame. He told the BBC: "As Flybe have said, this was an essentially commercial decision by them. It is an airline that has been suffering some challenges for some time. I don’t think this is a reflection on that levelling up agenda."
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Flybe had struggled to raise funds after narrowly staving off trouble in January.
A collapse was averted two months ago when the government said it would review air passenger duty (APD) – which hits domestic flights hard because it's charged at both departure and arrival.
Flybe also agreed a financial arrangement to defer tax payments of "less than £10 million" with HM Revenue and Customs, deferring its Air Passenger Duty payments.
But bookings then severely dropped off due to the coronavirus outbreak which "made a difficult situation worse", it is understood. Crisis talks had been held throughout Wednesday to try to secure a rescue package, but no deal was agreed.
All Flybe flights and those operated by sister airline Stobart Air have been cancelled, the Civil Aviation Authority said.
Government chiefs have asked bus and train operators to accept Flybe tickets and other airlines to "offer reduced rescue fares".
Speaking to Sky News, Transport Secretary Grant Shapps said: "The concern is for people who have found themselves stranded and we've got people at the airport to be able to assist and we're writing to all the other companies – coach companies, train companies – and asking them to assist."
But unions and politicians have reacted with fury. Oliver Richardson, national officer for major airline industry union Unite, said: "Unite members and the entire staff at Flybe, will be feeling angry and confused about how and why the airline has been allowed to collapse.
"It is simply outrageous that the government has not learned the lessons following the collapse of both Monarch and Thomas Cook that the much promised airline insolvency review has still not materialised.
"While other European countries are able to introduce measures to keep airlines flying when they enter administration, the UK remains unable or unwilling to do so."
Andy McDonald, Shadow Transport Secretary, said the loss of Flybe was "disastrous" and would cause "real anxiety" throughout the country.
He said: "Yet again more airline workers face an anxious future and the Government has to respond and provide them with all necessary support.
“Flybe has provided critical connectivity for many locations throughout the country especially where there is currently no realistic transport alternative other than flying.
“The Government has to answer how those vital links will be maintained following Flybe’s collapse. Communities will be concerned about what this will mean for their local economies and the Secretary of State has to come up with answers to these questions as a matter of urgency.”
A Government spokesperson emphasised that Flybe's difficulties "pre-date the outbreak" of coronavirus but said it was doing all it could to minimise disruption to travel.
Accountants Ernst & Young EY will handle the administration process.
Passengers due to fly with the airline have been told to not travel to the airport unless an alternative flight with another airline has been booked.
In the hours before Mr Anderson's email was sent, Flybe's website stopped working, just showing an error message which said the link is "no longer live".
"Flybe is unfortunately not able to arrange alternative flights for passengers," a message on the airline's website said.
While were grounded leaving hundreds of passengers stranded at the wrong airports as planes were impounded.
Fliers were left stuck on runways as tearful workers were told their jobs were on the line last night – while engineers in Edinburgh were reportedly already being laid off.
Workers and mechanics at the HQ in Exeter, meanwhile, were seen taking their tools home.
The airline's employees now face a nervous wait to find if the business can be saved, and experts warn a further 1,400 jobs in the wider supply chain are at risk.
Mr Anderson's letter said: "It's with enormous sadness and a deep feeling of sorrow that I share the upsetting news that Flybe is shortly being put into administration.
"Despite every effort, we now have no alternative – having failed to find a feasible solution to allow us to keep trading.
"While our shareholders and the leadership team have worked with the government and key suppliers to try to get the funding and support needed, this has not materialised.
"The coronavirus has impacted both our shareholders and ourselves and has put additional pressure on an already difficult situation.
"I am very sorry that we have not been able to secure the funding needed to continue to deliver our turnaround plan."
Mr Anderson, who has only been chief executive for eight months, apologised to staff, saying he appreciates "how distressing this news is and the shock and numbness that you will be feeling".
In a further statement, he went on to say "every possible attempt" to avoid collapse but had been "unable to overcome significant funding challenges".
"The UK has lost one of its greatest regional assets.
"Flybe has been a key part of the UK aviation industry for four decades, connecting regional communities, people and businesses across the entire nation.
"I thank all our partners and the communities we have been privileged to serve. Above all I would like to thank the Flybe team for their incredible commitment and dedication."
The company's demise is set to devastate small regional airports, anxious union bosses warned last night.
It comes after crisis talks between Flybe and the government failed to yield a £100million rescue package.
The airline carries an estimated eight million passengers a year between 71 airports across the UK and Europe.
The Government spokesperson said: "Following a commercial decision by the company, Flybe has ceased trading.
"We recognise the impact this will have on Flybe's passengers and staff. Government staff will be on hand at all affected UK airports to help passengers.
"The vast majority of Flybe routes are served by different transport options, and we have asked bus and train operators to accept Flybe tickets and other airlines to offer reduced rescue fares to ensure passengers can make their journeys as smoothly as possible.
"We know this will be a worrying time for Flybe staff and our Jobcentre Plus Rapid Response Service stands ready to help them find a new job as soon as possible.
"We are working closely with industry to minimise any disruption to routes operated by Flybe, including looking urgently at how routes not already covered by other airlines can be re-established by the industry.
"Through the reviews of regional connectivity and Airport Passenger Duty we have announced, we will bring forward recommendations to help ensure that the whole of the UK has the connections in place that people rely on.
"Flybe's financial difficulties were longstanding and well-documented and pre-date the outbreak of COVID-19. We are well-prepared a potential outbreak and this week we have set out an action plan with details of our response."
One plane flying from Birmingham to Edinburgh was unexpectedly diverted to Manchester Airport before passengers were told the company had gone bust.
One man onboard said customers were only told what happened after the plane touched down.
He said: "They didn't explain it to us at all. We landed in Manchester and the captain told us we weren't going anywhere.
"We thought we were landing in Edinburgh. The captain came out and she said that airports are refusing the refuel the planes because of a bad press.
"She said the company has gone bust. This plane has been impounded."
Responding to the airline's initial claims of a "miscommunication" regarding cancelled flights, one passenger stuck on the runway in Manchester, tweeted: "It’s gone bust ! Plane sat on runway at Manchester full of passengers- they’ve all been told company has gone bust."
A source said last night: “It might just have been able to struggle through, but only if air passenger duty had been reformed.”
BBC journalist Holly Hamilton, whose flight from Manchester was aborted shortly before takeoff, said crew members were in tears as news about the company's flight filtered through.
She wrote on Twitter: "Staff in tears. This is so grim. Plane is just really quiet."
Mike Clancy, general secretary of the Prospect union, said previously it would be a "devastating blow" for its members working for Flybe if it goes into administration.
He said: "The airline provides important connections to and from parts of the UK where other viable options often don't exist.
"A number of regional airports are also highly reliant on Flybe for most or all of their scheduled services.
"Prospect will do everything we can to support our members but the truth is the Government has badly let them down.
"The failure to provide the loan that is required as part of a package of rescue measures means the Government has failed in its commitment to every part of the UK."
Nadine Houghton, GMB National Officer, said: “These unfolding developments are a tragedy not only for Flybe’s loyal workforce, but a domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airports.
“The last thing regions crying out for investment need is to see infrastructure that maintains good jobs ripped away.
"We need the Government to urgently step in and save jobs wherever possible. The damage to already fragile local economies must be minimised.”
Money-saving expert Martin Lewis last night shared advice for passengers left out of pocket by the Flybe collapsed.
He urged passengers to try chargeback – a protection on Visa, Mastercard and Amex that entitles them to get their money back.
However it is not a legal protection, and card companies offer it at their own discretion.
Alternatively those who paid on their credit card could also be entitled to legally-binding Section 75 protection.
When previous airlines such as Monarch Airlines and Thomas Cook collapsed, the Civil Aviation Authority was ordered by the Department for Transport to launch a major repatriation operation to fly them home.
It is not yet clear whether the Government would order a widespread repatriation of stranded passengers.
When Monarch Airlines went bust in October 2017, the Government spent £60 million hiring planes to get passengers home, while bringing back Thomas Cook passengers last year has been estimated to have cost even more.
Sky Sports presenter Jeff Stelling wrote on Twitter: "Desperately sad if Flybe goes to the wall.
"Flown it many times. Will leave a big void in local UK airport services and a disaster for the likes of Southampton airport.
"Sorry for those who will inevitably lose their jobs."
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