LONDON (Reuters) – Flybe, the regional British airline, is fighting for survival and the British government is being called upon to help prevent a second airline failure in less than six months, according to media reports.
Flybe, whose flights were operating as usual on Monday, said it did not comment on rumor and speculation, while the government’s Department for Transport said it did not comment on the financial affairs of private companies.
Sky News reported that Flybe bosses held rescue talks with the government on Sunday as its fragile finances were hit by a higher fuel price during the winter months when demand is lower as fewer people fly.
Accountancy firm EY is on standby to handle the possible administration of Flybe, added Sky. EY did not immediately respond to requests for comment.
Should Flybe collapse, it would be the second high-profile failure in Britain’s travel industry in less than six months after Thomas Cook went into liquidation last September, stranding thousands of passengers.
Flybe has 68 aircraft and about 2,000 staff and was already struggling when it was bought by Connect Airways, a consortium created by Virgin Atlantic, Stobart Group <STOB.L> and investment adviser Cyrus Capital for $2.8 mln last year.
The new owners’ turnaround plan involved providing a 20 million pound ($25.97 million) bridging loan facility and up to 80 million pounds of funding, but reports said more investment was needed, pushing Flybe to the brink.
Flybe’s fleet of small aircraft includes the Bombardier Dash-8 Q400 which seats 77 passengers and connects regional airports such as Exeter, where it is based, Birmingham and Aberdeen to other British and European cities, as well as operating flights from Europe’s busiest airport Heathrow.
While demand for flights from airports such as Heathrow was healthy, Flybe struggled to compete against road and rail options on some regional flights, said analysts.
Ben Bradshaw, lawmaker for the opposition Labor party who represents Exeter, said Flybe was important for British connectivity.
“I would expect the government to work closely with its management to secure the future of such a strategically important business,” he was quoted by local news provider DevonLive as saying.
Flybe said in its statement: “Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don’t comment on rumor or speculation.”
(Reporting by Sarah Young, Editing by Paul Sandle and Louise Heavens)