One of the UK’s biggest airlines has been threatened with administration after finance talks collapsed.
According to reports, Flybe has been attempting to secure additional funding for almost a year after it was bailed out by an investment consortium led by Virgin Atlantic, Eddie Stobart and others.
Under the terms of the deal struck in January last year, investors agreed to purchase the airline for £2.2 million and inject almost £100 million to maintain operations.
It came after a torrid year for Flybe, which struggled with “rising fuel costs, currency volatility and political uncertainty.”
Speaking to BBC News, aviation industry expert Loizos Heracleous said it would be “no easy task” for Flybe to attract new finance as airlines face extreme regulation, “aggressive” unions, and sky-high costs.
“The aviation industry is an unattractive industry in terms of performance and returns on investment at the best of times,” he said.
“It is saddled with high-cost assets, namely planes, and key costs that fluctuate uncontrollably, mainly fuel, which accounts for around a third of total airline costs.”
The Guardian newspaper is also reporting that the airline will approach the Government in respect of emergency funding.
It says Flybe – which handles almost half of London’s domestic flights – has been holding talks with the Department for Business, Energy and Industrial Strategy and the Department for Transport over “emergency funding”.
Commenting on the situation, a Flybe spokeswoman said: “Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned.
“We don’t comment on rumour or speculation.”
A Government spokesperson added: “We do not comment on speculation or the financial affairs of private companies.”
Meanwhile, Brian Strutton, General Secretary of pilots’ union Balpa, said the airline’s collapse could cost more than 2,000 jobs nationwide.