Flybe has collapsed after months of talks with the government failed to secure a crucial GBP100m loan and the deadly coronavirus slashed demand, pushing Europe’s largest regional carrier into bankruptcy in the early hours of Thursday morning. Flybe confirmed it had entered administration after holding last-ditch talks with the UK government on Wednesday, a move that puts more than 2,000 jobs at risk and raises uncertainty over scores of regional air routes within the UK. “All flights operated by Flybe have been cancelled with immediate effect,” the airline said. “Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business. This has been compounded by the outbreak of coronavirus which in the last few days has resulted in a significant impact on demand.” EY is handling the airline’s administration. “The impact of coronavirus has made a bad situation worse,” said a person close to the airline. “It has been in a pretty precarious position for a while — it doesn’t take much to push it over the edge.” A government spokesman said: “We are working closely with industry to minimise any disruption to routes operated by Flybe, including by looking urgently at how routes not already covered by other airlines can be re-established by the industry.” <br/>
unaligned
Only five days ago, the boss of BA owner IAG warned that the coronavirus would push weaker airlines “over the edge”. Little surprise, then, that Flybe should be an early victim: a perennial struggler to turn a profit, flying routes that few others deemed commercially viable around the UK. But, even at such a geographical remove from the current outbreak, it is unlikely to be the last. For now, the effects of Covid-19 on airlines echo the pattern among the human population: standstill in China, tolerated by the stronger carriers abroad, but potentially fatal to those less robust. And Flybe’s pre-existing conditions included an unusually onerous tax burden of air passenger duty affecting domestic flights, dampened demand alongside Brexit, and increased fuel and leasing costs from a falling pound. Its investors had sensed a final opportunity after its share price had tanked; but by January they were begging the government, in vain, for assistance to stay alive. But other airlines are more directly exposed than Flybe to the crisis, first cancelling major Chinese routes and then seeing the drop in demand “rippling through” the global networks, as the IATA warned this week. Iata is in the process of quickly revising up its estimates, barely a fortnight old, of a $30b hit to revenues. No one knows, analysts and executives now say, quite how much this crisis is going to cost airlines. But many warn that it already looks worse for the industry’s bottom line than the aftermath of 9/11.<br/>
Virgin Atlantic is cutting the pay of its CE by 20% for four months as it becomes the latest airline to take emergency measures to protect profitability as the coronavirus continues to hit passenger demand. The British carrier on Wednesday said CE Shai Weiss had agreed to reduce his pay between April and July, while its executive leadership team would take a salary cut of 15%. Virgin Atlantic’s move comes as airlines around the world are freezing recruitment and slashing the number of flights in the wake of the spreading virus. The IATA will on Thursday significantly increase its estimate of the hit to global sales from the virus. Just 13 days ago it estimated a near-$30b impact, but this was based largely on the impact in Asia. Virgin Atlantic suffered a 40% drop in customer demand compared with March 2019, a sign that the virus is hitting demand for long-haul flights, not just short-haul flights in Europe. Virgin Atlantic says it will delay the start of its London Heathrow to São Paulo service, which was due to start on March 29, until the winter season with services beginning from October 5. The carrier has already suspended its London Heathrow to Shanghai service until April 19 and reduced the frequency of its Hong Kong route. The airline is also freezing recruitment and offering ground-based employees unpaid leave of between one to two weeks to be taken before July 31. It has further proposed to defer annual increases from March until August, when it will reassess affordability.<br/>
Flydubai reported Wednesday Dh198.2m in profits for 2019, marking a return to profitability after recording Dh159.8m in losses in 2018. The profits came even as revenues declined by 2.6% to Dh6b for the year, compared to Dh6.2b a year earlier, and passenger numbers fell nearly 13% to 9.6m last year from 11m. Flydubai said that it benefited from an interim settlement agreement with Boeing for some compensation for its 14 grounded 737 Max jets. Ghaith Al Ghaith, CEO at flydubai, did not disclose how much the carrier received from Boeing for having to ground its Max jets amid software issues with the model. Boeing’s 737 Max model has been grounded for about a year now across the globe after two fatal crashes involving Max jets belonging to Lion Air and Ethiopian Airlines. “We have concluded an interim settlement agreement with Boeing for certain compensation due to flydubai in relation to the grounding of the Boeing 737 Max. The details of the interim settlement agreement remain confidential,” he said.<br/>
Wizz Air could cut capacity by 10% from next month due to the drop in demand caused by the coronavirus epidemic, it said on Wednesday, extending measures that have already seen the low-cost carrier axe two-thirds of flights to Italy. “Subject to further impact on demand from COVID-19 (the virus), we are considering further adjusting network capacity in the magnitude of 10% in the first quarter of financial year 2021,” it said. The Central and Eastern Europe-focused airline said it was difficult to predict the extent and duration of the outbreak and its impact on its new financial year, which begins next month. CE Jozsef Varadi said: “Our ever-disciplined attitude to cost enables Wizz Air to partly offset some of the headwinds due to the COVID-19 outbreak, which have driven a temporary decline in demand and an increase in the cost of disruption as we put the well-being of passengers and crew first.”<br/>