Failures stories

How did COVID 19 killed Flybe?

This was the first airlines bankcrupcy that catch the news in the beginning of the COVID crisis. But is this crisis really guilty for this faillure ?

Flybe was once one of the most striking regional airlines in the UK. It ended up as a joke due to COVID-19. For the press, Flybe the first company to be declared bankrupt due to coronavirus in March when the situation became more and more serious in Europe. But the coronavirus was not the only cause of the fall of Flybe.

Given the current situations, this blog will mainly talk about failure rather than success stories. The pandemic has affected many airlines plans and sometimes their future. Many are still struggling to survive. Others had no other choice than to declare bankruptcy or go into debt restructuring.

How this became Flybe ?

We can really say that Flybe was a successful airline in these recent times. It doesn’t mean that it wasn’t successful in the past. Actually, it was up to a certain point.

Initially, Flybe started as a small carrier servicing the islands of Jersey and connecting them to the UK. Over the years the company gradually expanded its network away fro the channel islands.

At first, it started domestic flight within the UK without relation with the channel islands. Based on this success it expanded Europe from its UK bases. The company eventually became the largest regional airliner island in the UK. To show this new status and the fact that it was more linked with British isles than with Jersey, Jersey European became British European and shortly after Flybe.

The company continued to grow after 2000. It purchased British Airways regional airline business Became the launch customer for the Embraer E-190. This is when the success started to fade.

What was Flybe in the end ?

2000 see the unstoppable growth of Easyjet and Ryanair. Both Low-cost carriers had a huge appetite for the UK domestic routes. Of course, they stated with the biggest and more profitable ones leaving the rest for Flybe.

While the low-cost model might be interesting as successful for others, it could not be true for Flybe.

The idea was to be the regional low-cost company. It used the same tactic as the big low-cost carriers but stayed away from them. Unfortunately, it didn’t work on smalls domestics routes. Operating less profitable routes with smaller aircraft as not a good option for Flybe.

Over the years the management failed to find the business model that can sustain the size of the company and the growth of its low-cost competitors. Debts and losses increased.

The company operated many regional flights through the United Kingdom but how many were actually profitable? It is for sure that the provided the service that many smaller cities needed. However, they were not subsidized for this service and business is there to make profits and pay for itself.

The last option for the management and shareholders of the company was to put the company for sale. Flybe was eventually purchased by a partnership made by the Stobbart Group and Virgin Atlantic in 2019. The company was supposed to be renamed “Virgin Connect” and became a regional airline feeder of Virgin Atlantic.

The end

To allow the company to have enough funds during the time the Competition Bureau examined the purchase of the company by competitor airlines, the partnership invested loans into the company and secured them it loans by assets in the company.

The competition Bureau eventually accepted the purchase of Flybe by Virgin Atlantic and its partners in 2020. Had the company benefited from a better economic forecast it could have survived.

However, the pandemic became closer and closer to Europe. Its impact on the economic activity was not an IF but a WHEN. It became more and more certain that Flybe will need even more cash to survive. It tried to get some emergency inventing from the government but without any asset to be pledged as a security to the loans no future funding was possible.

Flybe had a very difficult end of life but we cannot say that coronavirus was the main cause of her bankruptcy. it was the last nail in the coffin.

Here is the end of the 40 one year of history of British aviation from Jersey European to flybe.

— Image Credits: Wikemedia / S├ębastien Mortier

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