How do you rescue a grounded airline when everything is up in the air?
EY-Parthenon was appointed to handle Flybe’s administration after a build-up of pressure on the struggling airline.
The past 18 months have certainly been challenging for the travel industry, but it was events prior to the pandemic that led to the EY-Parthenon Turnaround & Restructuring Strategy team working with Flybe for the first time.
The independent airline, founded in 1979, played an important role in the UK economy, providing valuable connectivity between the regions through airports such as Birmingham, Southampton, Manchester, Exeter, Edinburgh and Belfast. As of January 2020, Flybe operated 38% of all UK domestic flights.
But in January 2019, it was in financial difficulty and had entered discussions with several parties about a possible sale. The offers Flybe received were lower than expected and the EY-Parthenon team was engaged to carry out contingency planning in case the company had to be put into administration. The team already had extensive experience of the aviation sector, having worked with companies including BMI, Monarch, Alitalia and Thomas Cook.
However, shortly afterwards, a sale was agreed to a consortium consisting of Virgin Atlantic, Stobart Aviation and DLP Holdings. With the threat of administration over, the EY-Parthenon team withdrew.
Exactly a year later, Flybe contacted EY-Parthenon again. The COVID-19 pandemic had started to affect the business and flight bookings were falling. Several other issues were also having a negative impact on the business, including rising fuel costs, currency volatility, market uncertainty and Air Passenger Duty liabilities. The company had been talking to the UK government and shareholders consortium about a £100mn loan, but as travel restrictions were imposed and devastation to the airline industry grew, further funding became improbable. Flybe had no choice but to file for administration in March 2020. Alan Hudson, Simon Edel, Joanne Robinson and Lucy Winterbourne of EY-Parthenon were appointed to handle the process, conscious that no UK airline had ever been rescued from an insolvency.
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