Flybe on the brink of collapse

marno21 · 13-01-2020 12:53am #1

https://news.sky.com/story/regional-airline-flybe-in-frantic-bid-to-stave-off-collapse-11907407

Reports tonight that Flybe could be the next to go to the wall, even with the VS and Stobart takeover from last year.

Locker10a · 13-01-2020 1:03am

Sad news hope it doesn’t happen, it would have a big impact in Belfast City airport and Knock airport

kevinandrew · 13-01-2020 1:55am

Sounds like one of the new investors could be getting cold feet after seeing just now dire things are behind the scenes at Flybe.

A real shame if it does collapse, the staff have had a really tough couple of years so I feel for them the most.

irishkopite93 · 13-01-2020 10:33pm

I wonder if this implicates Stobart under the Connect Airways umbrella set up last year.

Were both airlines kept separate financially and operationally? Or if Flybe collapses does it bring Stobart with it?

Locker10a · 13-01-2020 10:55pm

irishkopite93 wrote: »

I wonder if this implicates Stobart under the Connect Airways umbrella set up last year.

Were both airlines kept separate financially and operationally? Or if Flybe collapses does it bring Stobart with it?

No they’re separate companies, Stobart actually own part of Flybe but are run entirely as a separate company

MoonUnit75 · 13-01-2020 10:58pm

Is LoganAir still connected to Flybe in some way?

irishkopite93 · 13-01-2020 11:01pm

Locker10a wrote: »

No they’re separate companies, Stobart actually own part of Flybe but are run entirely as a separate company

So profits and losses are kept entirely separate? I knew they operated separately under their individual AOC's but I wasn't sure how it worked financially.

Just to clarify Stobart in my original post referred to Stobart Air (ex Aer Arann) and not Stobart group.

King Mog · 13-01-2020 11:01pm

Isle of Mann will be hit bad !

Boredstiff666 · 13-01-2020 11:13pm

Everybody who flies into Knock always pulls out or gets into trouble.

Locker10a · 13-01-2020 11:33pm

Boredstiff666 wrote: »

Everybody who flies into Knock always pulls out or gets into trouble.

Well the other two long term airlines serving Knock are Ryanair and Aer Lingus, no sign of trouble there .... so

Locker10a · 13-01-2020 11:34pm

irishkopite93 wrote: »

So profits and losses are kept entirely separate? I knew they operated separately under their individual AOC's but I wasn't sure how it worked financially.

Just to clarify Stobart in my original post referred to Stobart Air (ex Aer Arann) and not Stobart group.

https://www.google.com/amp/s/amp.independent.ie/business/irish/stobart-air-soars-as-profits-reach-3-3m-37730976.html

redarmyblues · 13-01-2020 11:35pm

Just booked with them last week due a wedding in Edinburgh, paid the accommodation last night, work up to this news today.

Locker10a · 13-01-2020 11:36pm

They’ve been bailed out by UK government

“Cabinet trio to thrash out £100m Flybe rescue package”

https://www.google.com/amp/s/news.sky.com/story/amp/cabinet-trio-to-thrash-out-100m-flybe-rescue-package-11908144

Fireball81 · 13-01-2020 11:38pm

redarmyblues wrote: »

Just booked with them last week due a wedding in Edinburgh, paid the accommodation last night, work up to this news today.

Hav a trip to take the kids to Peppa Pig world (Southampton) in March. Paid with credit card so of they collapse should get money back (have credit card insurance too).

Selfishly if they are going to collapse I hope they go quickly so we can make alternative arrangements before things get expensive.

Obviously not nice for staff, will be a killer for provincial.UK if they close too. Hopefully for everyones sake it can be saved and that happens quickly so staff can have peace of mind re their future.

Locker10a · 13-01-2020 11:39pm

Fireball81 wrote: »

Hav a trip to take the kids to Peppa Pig world (Southampton) in March. Paid with credit card so of they collapse should get money back (have credit card insurance too).

Selfishly if they are going to collapse I hope they go quickly so we can make alternative arrangements before things get expensive.

Obviously not nice for staff, will be a killer for provincial.UK if they close too. Hopefully for everyones sake it can be saved and that happens quickly so staff can have peace of mind re their future.

As above they’ve been bailed out it seems so you’re travel in March should be fine

mickdw · 13-01-2020 11:44pm

So can the UK government rescue a company like that while in the eu or is this specifically possible due to leaving the eu?

Fireball81 · 13-01-2020 11:46pm

Locker10a wrote: »

As above they’ve been bailed out it seems so you’re travel in March should be fine

Holding back the govt tax, thought that idea half been ruled out - if i's approved hopefully it gives the airline some breathing space.

goingnowhere · 14-01-2020 12:04am

mickdw wrote: »

So can the UK government rescue a company like that while in the eu or is this specifically possible due to leaving the eu?

You always could, but there is a cap at 150 million euro I think, and it will need EU approval.

Airlines when going under generally owe an awful lot more so the provision is not used often, Flybe has a future, its the legacy financial baggage which is dragging it down, very different to Thomas Cook which was simply unable to trade at a profit

mickdw · 14-01-2020 12:07am

goingnowhere wrote: »

You always could, but there is a cap at 150 million euro

Thanks. I didn't know that. I thought state aid was very closely controlled within the EU to keep a level playing field.

Nijmegen · 14-01-2020 12:25am

mickdw wrote: »

Thanks. I didn't know that. I thought state aid was very closely controlled within the EU to keep a level playing field.

I’d bet in any event that any grumbling from the EU with “Independence Day” around the corner would be met with some of the gestures you see between fans at football matches. The EU has long known how to turn a blind eye to (or just re-invent) its own rules when it suits politically.

Padre_Pio · 14-01-2020 12:29am

mickdw wrote: »

Thanks. I didn't know that. I thought state aid was very closely controlled within the EU to keep a level playing field.

Rules are for the little people.
Guidelines are for governments

kevinandrew · 14-01-2020 3:06am

The level of support required by the British Government is considerable, I've heard of tax payments being deferred a few months but three years?! No doubt this bailout will be given due to Flybe's "strategic importance" to the UK but once it happens, it'll be up to Virgin/Stobart to steady the ship and I personally don't have much faith in either.

LXFlyer · 14-01-2020 3:54pm

It’s the regional route network that is strategically important as opposed to Flybe itself - the problem is that there are few alternative companies around.

If Flybe were to go under, regional connectivity would be rendered almost non-existent.

Too many eggs in one basket springs to mind.

devnull · 15-01-2020 2:12pm

Wouldn't be surprised if the bailout gets challenged under state aid rules although there's not much time for the EU to enforce them.

15-01-2020 2:20pm

devnull wrote: »

Wouldn't be surprised if the bailout gets challenged under state aid rules although there's not much time for the EU to enforce them.

I would imagine FlyBe are classed as a special case, similar to Aer Arran. Some of the islands they fly to depend heavily on their services.

Edit: that of course is Logainair, although FlyBe has a few routes that could be classed as PSO, it looks like it could be challenged alright.

marno21 · 15-01-2020 2:23pm

devnull wrote: »

Wouldn't be surprised if the bailout gets challenged under state aid rules although there's not much time for the EU to enforce them.

https://twitter.com/skynewsbreak/status/1217422242742665216

Didn’t take long

L1011 · 15-01-2020 4:18pm

Aegir wrote: »

I would imagine FlyBe are classed as a special case, similar to Aer Arran. Some of the islands they fly to depend heavily on their services.

Edit: that of course is Logainair, although FlyBe has a few routes that could be classed as PSO, it looks like it could be challenged alright.

Flybe has the Newquay PSO but I think that's it. The only longer distance PSOs in the UK are Newquay, Dundee and Derry to London; and Angelsey to Cardiff.

LXFlyer · 15-01-2020 5:00pm

devnull wrote: »

Wouldn't be surprised if the bailout gets challenged under state aid rules although there's not much time for the EU to enforce them.

If that’s successful it will surely lead to a significant number of their routes being classed as PSO.

L1011 · 15-01-2020 5:27pm

LXFlyer wrote: »

If that’s successful it will surely lead to a significant number of their routes being classed as PSO.

Would then need to be tendered; but who else has the AOC and the aircraft to bother? Eastern has very limited capacity and relies on BE for sales!

redarmyblues · 15-01-2020 7:10pm

devnull wrote: »

Wouldn't be surprised if the bailout gets challenged under state aid rules although there's not much time for the EU to enforce them.

UK access to EU air space post Brexit is the gift of the EU so if the EU sees state aid they won't get access.

cson · 15-01-2020 7:54pm

Isn't it just deferral of a tax bill rather than a write off?

Hotblack Desiato · 16-01-2020 2:39am

How the hell did they manage to run up tax arrears of £100m ???

cson · 16-01-2020 2:56am

UK ADP is GBP 13/26 per passenger one way.

They flew 9.5m pax last year, 9x13 = 117m.

Nijmegen · 16-01-2020 12:46pm

cson wrote: »

Isn't it just deferral of a tax bill rather than a write off?

I think a lot of people suspect that a deferral will turn into a write off. Like the good old "interest only" loans of the celtic tiger that never seemed to get repaid.

Hotblack Desiato · 16-01-2020 1:26pm

So they've collected basically a whole year's worth of APD, spunked it away on plugging their losses now tell the taxman they're broke?

HMRC should pursue an immediate winding-up order. It's not fair on legitimate businesses that some regard the revenue as a lender of last resort.

LXFlyer · 16-01-2020 1:53pm

Hotblack Desiato wrote: »

So they've collected basically a whole year's worth of APD, spunked it away on plugging their losses now tell the taxman they're broke?

HMRC should pursue an immediate winding-up order. It's not fair on legitimate businesses that some regard the revenue as a lender of last resort.

Without having a plan in place to maintain connectivity, that would basically render much of the regional air network dead as there aren’t many likely replacements at a moment’s notice.

Places like Belfast, southwest England and the Channel Islands would lose most of their regional flights in one go.

Any actions need to be thought through - an immediate wind up isn’t the solution.

Nijmegen · 16-01-2020 2:28pm

It's a political move. In the past they would have just bald faced bailed it out, rules today say you (rightly) can't and so this was the solution. Brings you right back to the future of regional air transport, tho and the desirability of funding a service that just isn't profitable. Interesting to see a lot of the discussion in the UK also pointing out that it isn't environmentally sustainable when most of the journeys in mainland UK can be completed via public transport a a fraction of the carbon emissions. Sky pointed out that a railway journey north to south would cost about twice what a FlyBe flight would, but would have like 20kg of carbon emissions vs 100kg for the flight. Now we know that the FlyBe flight is underpriced as they're losing money, but isn't there a better argument for subsidising the railway over the air transport link in the world of trying to reduce emissions. Not every journey is a man trying to reach his mothers death bed on the far side of the country in 1.5hrs where the railway would take him 5.

L1011 · 16-01-2020 7:25pm

The thing there is the railway is already subsidised at their fare level. More subsidy could be justified

LXFlyer · 16-01-2020 7:46pm

Nijmegen wrote: »

It's a political move. In the past they would have just bald faced bailed it out, rules today say you (rightly) can't and so this was the solution. Brings you right back to the future of regional air transport, tho and the desirability of funding a service that just isn't profitable. Interesting to see a lot of the discussion in the UK also pointing out that it isn't environmentally sustainable when most of the journeys in mainland UK can be completed via public transport a a fraction of the carbon emissions. Sky pointed out that a railway journey north to south would cost about twice what a FlyBe flight would, but would have like 20kg of carbon emissions vs 100kg for the flight. Now we know that the FlyBe flight is underpriced as they're losing money, but isn't there a better argument for subsidising the railway over the air transport link in the world of trying to reduce emissions. Not every journey is a man trying to reach his mothers death bed on the far side of the country in 1.5hrs where the railway would take him 5.

Long distance rail fares in GB can be extortionate if you don’t book well in advance.

That will have to change in order to mitigate the time difference with flying if such as The off-peak walk-up rail fare from Exeter to Edinburgh is GBP 216 single and that will take 7 hours.

Flybe will do the same trip tomorrow in 90 minutes for GBP 107.

Basically the UK government policy of shifting the burden of the cost onto rail passengers is going to have to be reversed.

Stovepipe · 17-01-2020 10:02am

Plenty of european countries were caught baling out their national airlines in the guise of "aid", Air France being one of the big offenders. Strictly speaking, Flybe should be done by the HMRC for tax offences,that an ordinary punter would be rammed with.

Hotblack Desiato · 17-01-2020 11:43am

When it gets to that level of what can only be called fraud, the directors need to be held personally and criminally responsible.

LeChienMefiant · 17-01-2020 12:44pm

Does this further the argument for HS2 if Flybe is gone?

rivegauche · 17-01-2020 1:40pm

This media circus has done so much damage to forward bookings for a company that can ill afford it.
The majority of their customers have the option to either jump in their car and drive a few hours more or drive to the nearest larger airport or to one of the train stations on a main trunk line.

LXFlyer · 17-01-2020 5:44pm

LeChienMefiant wrote: »

Does this further the argument for HS2 if Flybe is gone?

Not sure that HS2 has much relevance to flights to/from the southwest, Belfast, the Isle of Man or the Channel Islands where reliance on Flybe is highest.

LXFlyer · 17-01-2020 5:46pm

Hotblack Desiato wrote: »

When it gets to that level of what can only be called fraud, the directors need to be held personally and criminally responsible.

If they’re guilty of reckless trading, no doubt the financial authorities will pursue them accordingly.

What about coming up with many practical alternative solutions for the passengers where the impact of the airline potentially closing would be highest?

Or should that just be an afterthought?

wetoutside19 · 18-01-2020 7:26am

Stovepipe wrote: »

Strictly speaking, Flybe should be done by the HMRC for tax offences,that an ordinary punter would be rammed with.

Strictly speaking that’s completely rubbish. What tax offence are you talking about. That’s a very serious allegation.

At the end of 2018-19, HMRC had more than 700,000 time to pay arrangements in place to support taxpayers who were unable to pay their tax bills.

Nijmegen · 19-01-2020 4:55pm

wetoutside19 wrote: »

Strictly speaking that’s completely rubbish. What tax offence are you talking about. That’s a very serious allegation.

At the end of 2018-19, HMRC had more than 700,000 time to pay arrangements in place to support taxpayers who were unable to pay their tax bills.

Ahh, the air passenger duty is collected from passengers by airlines on behalf of the government. If they don’t have the £100m that has been deferred then the scale of their mismanagement of finances is huge. They effectively collected the tax and spent it on their ongoing operations. The decision of the government to defer the payment of a company that does not appear to have a chance as a going concern without other cash being bunged in is state aid by another name, rather than a little bridging matter for a company tight on cash in Q1 to pay up their national insurance bill of £10k

wetoutside19 · 19-01-2020 8:27pm

Nijmegen wrote: »

Ahh, the air passenger duty is collected from passengers by airlines on behalf of the government. If they don’t have the £100m that has been deferred then the scale of their mismanagement of finances is huge. They effectively collected the tax and spent it on their ongoing operations. The decision of the government to defer the payment of a company that does not appear to have a chance as a going concern without other cash being bunged in is state aid by another name, rather than a little bridging matter for a company tight on cash in Q1 to pay up their national insurance bill of £10k

Please confirm where you are getting an outstanding bill of £100m for ADP, I read £10m but the bailout covers a deferment of £100m, big difference between what I understand and what you have typed above.

While i take onboard your comment that they are merely collecting agents for the government, they fly 8m per annum so I estimate £10m is 1-2 Mths liability. I’d imagine that all the revenue goes into a bank account and they pay their bills using this revenue pile, they don’t take a passengers revenue and put it into different piles saying this pile is airport x, this pile is airport y, this pile is tax A, etc

So back to my original point, I don’t see how a business hitting a rough patch and are struggling to pay their bills means they “ should be done by the HMRC for tax offences” like stovepipe stated

California Dreamer · 19-01-2020 8:43pm

wetoutside19 wrote: »

Please confirm where you are getting an outstanding bill of £100m for ADP,

https://www.thesun.co.uk/travel/10732517/flybe-news-collapse-flights/

wetoutside19 · 19-01-2020 9:01pm

California Dreamer wrote: »

https://www.thesun.co.uk/travel/10732517/flybe-news-collapse-flights/

Flybe confirms it will get a tax and duty holiday https://www.bbc.co.uk/news/business-51147471

As for quoting the sun........

California Dreamer · 19-01-2020 9:10pm

wetoutside19 wrote: »

Flybe confirms it will get a tax and duty holiday https://www.bbc.co.uk/news/business-51147471

As for quoting the sun........

You asked and it was answered.

I had heard 100m on BBC but far too lazy to go look for the report.

Flybe on the brink of collapse

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