British airline Flybe collapses as virus hits flights worldwide

British airline Flybe collapses as virus hits flights worldwide

March 6, 2020 0 By mykenyancareers
flybe - British airline Flybe collapses as virus hits flights worldwide
Flybe, which employs 2,000 people, had failed to turn around its fortunes since being purchased by the Connect Airways consortium last year, initially owing to weak demand and fierce competition.

LONDON,
United Kingdom, Mar 5 – One of Britain’s biggest airlines, Flybe, collapsed
Thursday with all its flights grounded, the company said, as the coronavirus
epidemic takes a heavy toll on airlines around the world.

A
statement on Flybe’s website said the company had entered administration and
could not arrange alternative flights for its passengers.

“All
flights have been grounded and the UK business has ceased trading with
immediate effect,” said the airline, which avoided going bust in January
only after being granted a tax holiday by the UK government.

Flybe,
which employs 2,000 people, had failed to turn around its fortunes since being
purchased by the Connect Airways consortium last year, initially owing to weak
demand and fierce competition.

That
has now been compounded by the coronavirus, with a slew of airlines cancelling
flights and warning profits would take a hit from decreased demand.

The
announcement came hours after British media reported that the airline could
collapse following its failure to secure a £100 million ($129 million, 115
million euros) state loan to help stabilise the business.

The
COVID-19 virus’ impact on travel “has made a bad situation much
worse”, sources told the BBC, while Bloomberg News reported Thursday that
no agreement could be reached on a virus-related bailout.

Small
British airlines have suffered recently from volatile fuel costs and a weak
pound.

Flybe
is the biggest operator of UK domestic flights. The no-frills airline carries
around eight million passengers annually and flies from 43 airports across
Europe and 28 in Britain.

Its
owner, the Connect Airways consortium, is led by Virgin Atlantic and also
includes investment firm Cyrus and infrastructure specialist Stobart.

Following
Flybe’s tax deferral earlier this year, rival companies including British
Airways-parent IAG complained to the European Union that it was receiving
unfair state aid.

The
government has said its assistance does not breach EU rules and that help is
based on the importance of the company’s domestic services and regional
economic reliance on them.

However,
that contrasted with the fate of British holiday giant Thomas Cook, which
collapsed without government assistance last September, causing the loss of
22,000 jobs worldwide and stranding 600,000 holidaymakers abroad.