The administrator of Flybe has warned that a sale of the failed airline is at risk from the potential loss of its operating licence and the crisis in the industry.
Alex Ralph www.thetimes.co.uk
EY, appointed in March after Europe’s biggest regional carrier collapsed, has received about 20 non-binding offers, including for the majority of the remaining business, according to the joint administrators’ proposals. However, EY said that global travel restrictions meant that the timeframe to complete any sale was challenging and, coupled with the uncertainty over the future of the airline industry, had resulted in “capital constraints, eroding valuations and diminished bidder appetite”.
If a sale of all or part of Flybe’s business cannot be completed, EY will try to sell its assets.
The disposal is also threatened by the Civil Aviation Authority, the regulator, agreeing that Flybe’s operating licence should be revoked. The CAA, EY said, had argued that the sale’s progress “did not support a realistic prospect of a transaction”. EY disagreed and had 14 days from April 16 to appeal to Grant Shapps, the transport secretary.
The administrator said: “For the avoidance of doubt, it is unlikely that a business sale, including the transfer of existing employees, will be possible if the operating licence is revoked since it prevents the sale of the airport slots, which would be central to any bid for the business.”
A spokesman for the CAA said the secretary of state would now “decide whether to uphold, reverse or vary” the CAA’s decision, which it issued last month.
Flybe operated just over half of domestic flights outside London. It carried eight million passengers last year, flying between 71 airports in the UK and mainland Europe, including Southampton, Exeter and Aberdeen.
It was acquired last year by Connect Airways, a consortium made up of Virgin Atlantic, part-owned by Sir Richard Branson, Cyrus Capital, the Mayfair-based hedge fund, and Stobart Group, owner of Southend airport.
EY said that indications from secured creditors were that the outstanding secured debt was £135.6 million, but that was under review. Claims from unsecured creditors, mainly about 900,000 customers, are in the region of £317 million. They are expected to receive less than 1p in the pound.