FlyBe has collapsed into administration after the UK regional airline saw a slump in bookings as a result of the coronavirus outbreak, with passengers advised not to travel to any airports today for flights.
The collapse, which will cost around 2,000 jobs, will also result in a financial hit for FlyBe's owner Connect Airways, a consortium of firms led by Virgin Airlines which rescued the airline in July last year.
In an announcement on Thursday, Stobart Group Ltd (LON:STOB), which holds a 30% stake in Connect, said the collapse will result in a non-cash balance sheet impact of £43.3mln as well as an additional £7mln investment made in 2020. Both will be written down to zero.
Stobart also said FlyBe's failure will cause “a short-term impact” to London Southend Airport, where FlyBe had planned to operate ten routes from spring this year. However, it reiterated that the long-term prospects for the airport remained “compelling”.
FlyBe was hoping for an emergency cash injection from taxpayers. Last month the UK government approved a £100mln loan to the airline and deferred an outstanding tax bill in a bid to keep the company afloat.
At the time, the previous bailout attracted severe criticism from other airlines, with British Airways owner International Consolidated Airlines Group SA (LON:IAG) accusing the deal of contravening EU state aid rules as its chief executive Willie Walsh dubbed the deal a “blatant misuse of public funds”.
Airlines have been hit hard by the coronavirus epidemic, which has spread across multiple continents and caused a sharp downturn in traveller numbers as holidaymakers stay home and multiple governments impose border restrictions to and from affected areas.
-- Adds Stobart comment --