A sale of the failed Flybe is reported to be at risk from the potential loss of its operating licence and the Covid-19 crisis enveloping the aviation sector
EY, appointed administrator in March after the collapse of the regional carrier, 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,” according to The Times.
EY will attempt to sell its assets if a sale of all or part of Flybe’s business cannot be completed.
The disposal is also threatened by the Civil Aviation Authority agreeing that Flybe’s operating licence should be revoked.
EY reportedly said that the aviation regulator 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 transport secretary Grant Shapps.
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 CAA spokesman said the secretary of state would now “decide whether to uphold, reverse or vary” the CAA’s decision, which it issued last month.
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.
Flybe’s operating loss for the year to March 31 was reported to be £215 million.
Flybe carried eight million passengers last year, flying between 71 airports in the UK and mainland Europe, including Southampton, Exeter and Aberdeen.
The airline was acquired last year by Connect Airways, a consortium comprising Virgin Atlantic, Cyrus Capital and Southend airport owner Stobart Group.