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Coronavirus pushes flagging Flybe into collapse, risking 2,000 jobs

CARDIFF, WALES - JANUARY 18: A Flybe Bombardier DHC-8 Q400 aircraft at Cardiff Airport on January 18, 2020 in Cardiff, United Kingdom. British airline Flybe, who account for 36% of UK domestic flights, have struck a deal with the UK government to defer tax payments and have received increased funding from owners Connect Airways. The UK government also agreed to conduct an urgent review of Air Passenger Duty on domestic flights. (Photo by Matthew Horwood/Getty Images)
A Flybe plane at Cardiff Airport in January. (Matthew Horwood/Getty Images)

The impact of the coronavirus fallout pushed the already flagging Flybe into administration on Thursday morning, immediately grounding all of the airline’s flights and putting around 2,400 jobs at risk.

Eleventh-hour talks with the UK government failed to help Flybe secure a £100m ($128m) loan required to keep the regional airline afloat.

Administrators from financial services firm EY have been appointed to oversee the process.

“Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business,” Flybe said in a statement.

“This has been compounded by the outbreak of coronavirus which in the last few days has resulted in a significant impact on demand.”

Flybe in January negotiated an extension on several million pounds in unpaid air passenger duties with the government.

Read more: Flybe CEO tells employees of ‘deep feeling of sorrow’ over collapse

But the deal, known as a time-to-pay arrangement, was not enough to save Flybe, which had requested a further £100m loan from the government.

This idea was rejected by the government, and management at Flybe became concerned that proposed cuts to air passenger duties would not come into effect until next year, according to the Financial Times.

The transport ministry said in a statement that Flybe had ceased trading “following a commercial decision by the company.”

“We recognise the impact this will have on Flybe’s passengers and staff. Government staff will be on hand at all affected UK airports to help passengers,” the ministry said, noting that most Flybe routes were served by different transport options.

“This is a sad day for UK aviation and we know that Flybe's decision to stop trading will be very distressing for all of its employees and customers,” said Richard Moriarty, the chief executive of the Civil Aviation Authority.

The airline is owned by Connect Airways, a consortium backed by Virgin Atlantic, Stobart Aviation, and Cyrus Capital Partners. It took over the airline last year.

The consortium had already ploughed more than £100m into the airline last year, and invested a further £25m in January.

The three parties said on Thursday that, despite the efforts of those involved, the impact of the coronavirus outbreak “means that the consortium can no longer commit to continued financial support.”

The consortium said that it was “deeply disappointed that Flybe has been unable to secure a viable basis for its continuing operations and has therefore entered an administration process.”

Read more: Wizz Air latest airline to cut flights due to coronavirus

“The consortium wishes to express its immense gratitude to the 2,400 people employed by Flybe for their commitment and energy over the past 12 months.”

Trade union GMB urged the government to step in to save jobs wherever possible.

Calling the collapse a “tragedy” for the company’s workforce, GMB national officer Nadine Houghton said it put a further 1,400 jobs in the wider supply chain at immediate risk and threatened the future of regional airports.

“The last thing regions crying out for investment need is to see infrastructure that maintains good jobs ripped away.”

Many airlines have announced sweeping cuts to their services due to the effects of the coronavirus outbreak, which has sapped demand for air travel across the world.