Citing “industry sources”, The Telegraph at the weekend reported accountancy firm Ernst & Young (EY) had entered into discussions with the government over a proposal for Flybe, which operated a number routes under government-subsidised Public Service Obligation (PCO) contracts.
However, EY subsequently said no such talks had taken place over the government “taking Flybe out of insolvency”, but stressed it was open to approaches.
“At this time, we can confirm there are no discussions between the joint administrators and government about taking Flybe Limited out of insolvency,” said EY in a statement. “We continue to be open to approaches from all parties in order to realise returns for creditors.”
Flybe collapsed during the early hours of 4 March after stakeholders, including the Virgin Atlantic-led Connect Airways consortium which rescued Flybe from the brink of collapse in January 2019, decided to pull funding support for the struggling carrier.
A number of domestic carriers, including Loganair, Eastern Airways and Blue Islands, have taken on former Flybe routes, although some of these have since been impacted by travel restrictions arising from various authorities’ responses to the coronavirus pandemic.
It comes as government support for the aviation sector amid the pandemic looks increasingly unlikely in the short-term, despite vociferous protestations from the aviation sector.
While announcing the government’s first round of measures to support businesses through the pandemic almost a fortnight ago, chancellor Rishi Sunak said the Treasury was working with the Department for Transport on a dedicated support package for Britain’s aviation sector.
This, however, is yet to come to fruition, and Sunak has since said airlines should hold out for as long as possible before making a formal application for state aid. Loganair and perhaps most notably Virgin Atlantic have signalled their intent to make an application.
Sunak added the support would only be available as a last resort, and urged carriers to seek further investment and/or capital from the private sector or existing investors.
Other UK-registered carriers, such as British Airways and easyJet, have taken steps such as grounding the majority of their fleets and furloughing staff to stave off the impacts of the coronavirus, and have variously stressed they have the necessary capital reserves and facilities to remain in business for the foreseeable future.
