Flybe, Europe’s largest regional airline, was locked in survival talks on Sunday night less than a year after being bailed out by a Virgin Atlantic-led consortium.
Sky News can exclusively reveal that Flybe, which handles over half of Britain’s domestic flights outside London, has been trying to secure additional financing amid mounting losses.
EY, the accountancy firm, has been put on standby to handle an administration of Flybe Group, according to aviation industry sources.
The government is understood to have been briefed on the crisis at Flybe in the last few days, with more than 2, jobs at risk if the company collapses .
One source close to Flybe said on Sunday night that the Department for Transport and Department for Business, Energy and Industrial Strategy had been working to determine whether the government could provide or facilitate any emergency financing to the company.
If Flybe is unable to stitch together a rescue deal, it would be the second major airline collapse in four months, following Thomas Cook Group’s implosion last September.
Flybe operates about 75 aircraft and serves more than 365 airports across the UK and Europe.
In Britain, it has a significant presence at airports including Belfast, Birmingham, Manchester and Southampton.
(Under a deal that completed last March, a consortium comprising Virgin Atlantic, Stobart Group, which owns Southend Airport, and Cyrus Capital Partners acquired Flybe’s operating assets.
Cyrus Capital owned the largest share of a newly formed company called Connect Airways, with 53%, while the other partners owned (*******************************************************% each.
Mark Anderson, a Virgin Atlantic executive, was installed as Connect Airways’s chief executive.
The consortium had pledged to pump £ 432 m into Flybe’s turnaround plan, with the airline being re-branded as Virgin Connect from later this year.
Insiders said, however, that Connect’s proposed financing requirements had become more onerous, suspended leaving Flybe on the brink of collapse.
It was unclear on Sunday how any rescue financing involving the government might be structured.
If a survival bid fails, however, it would embarrass a government buoyed by its numerous new Commons seats in constituencies located near some of the northern airports that F lybe serves.
The regional airline did come close to outright collapse a year ago amid an acrimonious takeover battle that left shareholders fuming that their equity had been left worthless.
That came just months after Flybe’s board had rejected a 40 pa-share takeover bid.
Flybe launched a formal sale process in the autumn of (***************************************, blaming a toxic cocktail of currency volatility, rising fuel costs and Brexit-related uncertainty.
An industry price war has also exacerbated airlines’ financial troubles in recent years.
Flybe, Stobart Group and EY all refused to comment on Sunday night.
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