18 APRIL 2022
© 2022 Business Travel News Ltd.
We wish the new Flybe enterprise every success. Any initiatives that brings jobs and investment to the beleaguered British airline industry deserves all the support it can get.
However, with Flybe there has to be questions answered of its set-up and future. Its published plans seem very ambitious and whilst less than originally suggested months ago, still calls for 23 routes to 16 airports in the UK and Europe with a fleet of 23 aircraft.
Flybe was grounded 20 March 2020 after a succession of bad management decisions and large losses. The Exeter headquarters were closed and virtually all staff dismissed. The assets were sold to Thyme Opco Ltd (now renamed Flybe Ltd) whose ultimate owner is US hedge fund Cyrus Capital Partners. Birmingham Airport was announced as the new headquarters and an American, David Pflieger, appointed as Chief Executive.
EY Parthenon, perhaps better known as accountants Ernst & Young, are taking a close interest in Flybe’s future on behalf of unnamed clients who are looking to claim cash from the new company – if it turns out to be a success.
It said that although its dealings with the new ‘Flybe 2’ are confidential they are linked “to the future performance of the new ‘Flybe’ business being run by the purchaser”.
The administration of the original Flybe is likely to continue until 2024 and EY has revealed that up to £650m is being demanded by more than 900,000 unsecured creditors including staff. There is no cash to pay them. It estimates these applications will be between £550m and £650m, but with claims still coming in it is “possible that this figure will be materially higher once all claims have been received and an adjudication process is complete”.
But EY has said that it has made an application to the High Court for an order not to make a distribution of cash to these creditors on grounds it would not be cost effective. In other words, so little cash is in the pot the creditors would receive hardly anything so it is not even worth distributing it.
The five largest unsecured creditors are BRAL Trustees, owed £96,500,000; NAC Aviation, short of £90,578,757; Norddeutsche Landesbank Girozentrale, which is claiming £82,930,860; the Environment Agency, claiming £57,448,541; and GE Engine Service LLC, owed £17,126,790.
The joint administrators are, however, still receiving money from debtors and can pay some secured creditors. A fourth progress report revealed that in the past six months administrators sold five engines to three separate parties for £3.8m. Two other PW150 engines remain to be sold, a third is being claimed but is subject to other claims, including from insurers.
Meanwhile, £6.8m in cash has been recovered from bank accounts. A further £3.4m has been collected from credit card acquirer firms bringing the total to £14.7m. Since the report a further final £433,511 has been received from card acquirers.
A further £1.8m has been recovered from trade debtors, bringing the total to £7.5m, and £300,000 had been recovered from other debtors. Of the trade debtors, £7.3m is owed from Virgin Atlantic Airways Ltd, of which £4.9m has been received now, with more due this year. Another £94,000 is being paid by other debtors. A total of £1.1m has now been recovered from insurance claims and the administrators are seeking a VAT repayment of £1m.
The real value of Flybe lies not with its excellent brand but the credibility of its slots at Amsterdam and Heathrow. What are their true values? Will the backers keep funding routes that are not profitable? Besides staff, suppliers and airports will need paying as well, many up front. The new Flybe is also going to have to deliver exceptional reliability to win back loyal customers.
The country requires a Flybe for regional point-to-point flying. Going back as far as Dan Air it has always been a precarious investment. For BA and KLM, Flybe is but a pin prick. At Southampton Aurigny, BA CityFlyer, Blue Islands, Eastern and Loganair might be minimally affected. Flybe is going to be hard pushed at Belfast City competing with Emerald under the Aer Lingus banner.
Birmingham is a good choice for the new airline’s headquarters. Britain’s second largest city needs more air connections but one has to question head to head competition on certain routes. We wish the new Flybe enterprise every success.
Also see Flybe flies in this week's BTN.
All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum
Does the country require a Flybe for regional point-to-point flying? If there is a commercial market to be served why not Loganair, easyjet etc?
Anne Jones, Salford
Wise words these.
Frank Jones, West Bromwich
I too wish Flybe every success and having paid by credit card was paid out when the old airline collapsed. But I don’t see the point of taking on easyJet and KLM on Birmingham to Amsterdam. The jet aircraft used are twice as large as FlyBe’s Q400’s with very limited overhead luggage space and uses proper airbridges, not I assume buses in Amsterdam. They must be cheaper to operate per passenger.
James Duff, Hounslow
What is the truth of the slots. Can someone explain. I was told that they have to be owned for 12 months and then can be sold. But when does the 12 months start?