UK airline Flybe has collapsed into administration for a second time, less than a year after relaunching to connect underserved regional destinations.
The airline announced its closure in the early hours of Saturday morning, as it cancelled all its flights and urged passengers not to try to travel.
The sudden collapse means that lucrative take-off and landing slots at Heathrow airport will be for sale as part of the insolvency process, and the airline’s administrators told the Financial Times that there was “a massive ‘for sale’ sign” on the company.
Flybe only began flying again under new owners in April 2022, after the original airline collapsed just as the impact of the coronavirus pandemic swept through the travel industry in March 2022.
The carrier was bought from administrators EY in October 2020 by a company run by investor Lucien Farrell’s hedge fund Cyrus Capital. Cyrus had originally injected money into Flybe as part of a rescue spearheaded by Virgin Atlantic in 2019.
The relaunched airline was a significantly smaller operation, and operated flights on 21 routes to 17 destinations across the UK and EU on a fleet of eight leased aircraft.
Some rival industry executives and aviation analysts had questioned the wisdom of restarting Flybe. Regional flying in the UK has often barely been profitable and rivals had already taken over many of the original Flybe’s viable old routes.
David Pike, a partner at administrator Interpath Advisory, explained the sale of the business would include slots at capacity constrained Heathrow airport.
He said the slots could only be sold alongside a sale of the business, and would not be available to buy on their own.
“Someone needs to come in and buy the UK business and/or the Amsterdam business. There needs to be a substantive business sale,” he said.
Flybe operated 86 daily slots per week at Heathrow, according to an industry executive.
Heathrow slots have previously traded for tens of millions of pounds, but Pike cautioned they were harder to value following the financial hit to aviation from the pandemic.
“Most slot transactions took place before Covid when market conditions were completely different,” he said.
Pike said Flybe had suffered “significant” losses and a “cash drain” after suffering “a number of shocks”, including the late delivery of planes, and that “enormous efforts” to find new money or to sell the business had failed.
Paul Charles, a travel industry consultant, said he was not surprised that Flybe’s relaunch had failed.
“It was resurrected for the purpose of clinging on to Heathrow slots and there was no major demand for its routes when up against domestic train services, Zoom, and other airlines,” he said.
Pike said money could be returned to Flybe’s shareholders following a successful sale, but only after its creditors were paid.
“Clearly shareholders are completely out of the money, unless the value achieved for the sale is so high as to pay everyone involved,” he said.