Flybe mute on collapse rumours

Thomas Cook has partnered with LMEY to develop Aldiana hotels in the growing African and Egyptian markets.
Speculation has reminded many of the collapse of Thomas Cook

Flybe has so far failed to comment on speculation over the weekend that it was in talks to stave off a collapse.

Speculation suggested that the UK government had been working to consider whether it could provide emergency funding for the group.

The airline tweeted: “Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don’t comment on rumour or speculation.”

The comments were sparked by a story on Sky News which reported that EY had been put on standby to handle an administration of Flybe Group, according to aviation industry sources.

Diana Holland, Unite’s assistant general secretary for transport, food & agriculture sectors and equalities said: “The government must demonstrate it has learned the lessons from the collapse of Monarch, which it failed to apply during the collapse of Thomas Cook.”

This year was due to see Flybe become Virgin Connect, with a rebrand of what is Europe’s largest regional airline after last year’s sale to Connect Airways, which was owned by Virgin Atlantic and its partners Stobart Group and Cyrus Capital. The consortium paid £2.8m for Flybe’s operations and another £2.2m for the parent company, promising a further £100m for the airline’s turnaround plan.

Connect Airways CEO, Mark Anderson, said at the time of the deal: “We are hugely excited by this milestone in our airline’s 40-year history. We will remain true to our heritage and reason for being, which is offering essential regional connectivity to local communities.

"At its heart, Virgin Connect will be passionately focused on becoming Europe's most loved and successful regional airline. It will offer travel that is simple and convenient with the personal touch. Our customers will naturally expect the same exceptional travel experience as they do with other Virgin-related brands. Whatever their reason for flying, we want our customers to feel loved and know we will always put their needs first in every decision we take.

“As part of the Virgin family, we now have a tremendously re-energised team. From here on in, we invite our customers, partners and the communities we serve to join us on every step of this exciting journey!”

The news follows the collapse last year of Thomas Cook, which saw its airline businesses sold as part of efforts to recoup cash.

The company’s Nordic business, the Ving Group, was acquired by a group of investors formed of Strawberry Group, Altor Funds and TDR Capital for an undisclosed amount. Strawberry Group and Altor each held 40% with TDR taking the remaining 20%, with plans for a Skr6bn ($618m) restructuring package in liquid funds and guarantees.

The business included brands such as Globetrotter, Spies and Thomas Cook’s Scandinavian airline, which were renamed Sunclass Airlines.

Strawberry Group also owned the Nordic Choice hotel company. Founder Petter A. Stordalen said, “Today is a big day for a man who loves the travel industry. The Nordic business has created a portfolio of strong Nordic brands, and is today the crown jewel among Nordic tour operators. That is why I am incredibly proud that, together with two solid partners, we have reached a solution that allows us to secure the future of these companies.

“With a strong and long-term Nordic ownership, the Ving Group now has the conditions needed to do what they are best at: creating unique experiences for their guests and giving their customers the best week of the year.”

“The new owners’ extensive industry experience and financial strength will give us the long-term stability we need as well as completely new opportunities to develop our customer offering in the future,” said Ving Group CEO Magnus Wikner.

At Condor, the German-based Thomas Cook Group airline, the European Commission approved a six-month bridging loan that was granted by the German Federal government and the Hessian state government, having decided that it was permissible as state aid. The loan was to support the airline through the traditionally weaker winter booking period

Ralf Teckentrup CEO of Condor Flugdienst, said: “A healthy business like Condor is also in the interest of a properly operating market, because we are not only a significant competitor in the tourism sector, but also important for the competition in the German and European aviation industry.”

Insight: Flybe is not Thomas Cook, let’s make that clear from the outset. It is nowhere near the size: easyJet flies as many people in a month as Flybe does in a year.

Think of it more like a rural bus service. Sure, not that many people use it, but for those which do and the regions it serves, it is a critical connection, particularly in the UK, where public transport is more of a concept than a reality.

So this won’t be a case of Spanish resorts left wondering who’s going to fill the deckchairs. It does, however, act as yet another canary in the coal mine of the airline industry and, as Unite pointed out, another chance to remind the UK government of its responsibilities.

At Condor, the move by the German government was in contrast to that in the UK, where Thomas Cook CEO Peter Fankhauser told a Business, Energy and Industrial Strategy Committee inquiry that the company only had one meeting with a government minister in the build-up to the collapse, adding that, if the government had provided £200m to secure the bailout from Fosun Tourism Group, then the tour company would have been saved.

Striking stuff and we wonder whether lessons can be learned. Because what ails Flybe is not unique: uncertainty over Brexit and the recent jump in oil prices to name but two.

Should Flybe exit stage left, it is not likely to be the last. And the next could have graver consequences for the hotel sector. And, as the number of airlines narrows, prices are likely to rise. Again not fun for those cheap escapes.

 

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