British airline Flybe has collapsed into administration for the second time, less than a year after relaunching to connect underperforming regional destinations.
The airline announced the closure on Saturday morning, as it canceled all flights and asked passengers not to attempt the journey.
Administrators say 276 employees have lost their jobs. EasyJet, British Airways and Ryanair are offering discounted fares to stranded Flybe customers.
The sudden collapse means the lucrative take-off and landing slots at Heathrow airport will be sold as part of insolvency proceedings, and the airline’s management told the Financial Times there was a “massive ‘for sale’ sign” at the company.
Flybe only started flying again under new owners in April 2022, after the original airline collapsed due to the impact of the coronavirus pandemic on the travel industry in March 2022.
The operator was bought from the administrator EY in October 2020 by a company managed by investor Lucien Farrell’s hedge fund, Cyrus Capital. Cyrus originally injected money into Flybe as part of a rescue led by Virgin Atlantic in 2019.
The relaunched airline is a smaller operation, and operates flights on 21 routes to 17 destinations in the UK and the European Union with a fleet of eight leased aircraft.
Some rival industry executives and aviation analysts have questioned the wisdom of restarting Flybe. Flying regionally in the UK is often almost unprofitable and competitors have usurped many of the original Flybe’s old routes.
David Pike, executive at Administrator Interpath Advisory, explained that the sale of the business will include slots in the limited capacity of Heathrow airport.
He said the slot can only be sold together with the sale of the business, and will not be available to buy separately.
“Somebody needs to come in and buy the UK business and/or the Amsterdam business. There needs to be a substantial sale of the business,” he said.
Flybe operated 86 daily slots per week at Heathrow, according to industry executives.
Heathrow slots have previously traded for tens of millions of pounds, but Pike cautions they are harder to value after the financial hit to aviation from the pandemic.
“Most slot transactions were done before Covid when market conditions were very different,” he said.
Pike said Flybe has suffered “outstanding” losses and “cash drain” after suffering “several shocks”, including flight delays, and that “big efforts” A to find new money or sell the business have 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 sticking to the Heathrow slot and there is no major demand for the route when it competes with domestic train services, Zoom, and other airlines,” he said.
Pike said the money could be returned to Flybe shareholders after a successful sale, but only after creditors are paid.
“Clearly the shareholders are completely out of money, unless the value achieved for the sale is high enough to pay everyone involved,” he said.