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 is the first company to be declared bankrupt due to coronavirus in March when the situation became more severe 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’t say that Flybe was a successful airline in these recent times. It doesn’t mean that it wasn’t successful in the past. 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 from 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 most significant regional airline 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. Then, 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 vast appetite for the UK domestic routes. Of course, they started with the biggest and more profitable ones leaving the rest for Flybe.
While the low-cost model might be attractive for others, it could not be accurate for Flybe.
The idea was to be a low-cost regional 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. They were 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 profitable? It is for sure that they provided the service that many smaller cities needed. However, they were not subsidized for this service, and a 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. A partnership made by the Stobbart Group and Virgin Atlantic purchased Flybe in 2019. The company was supposed to be renamed “Virgin Connect” and became a regional airline feeder of Virgin Atlantic.
The partnership invested loans into the company and secured its loans by assets in the company. These loans were needed to fund the company’s immediate need until the competition bureau approbation of the deal.
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 evident that Flybe will need even more cash to survive. It tried to get some emergency inventing from the government, but no future funding was possible without any asset to be pledged as a security to the loans.
Flybe had a brutal end of life, but we cannot say that coronavirus was the leading 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 / Sébastien Mortier