Could The UK Government Take Over Flybe?

As airlines around the world continue to grapple with the coronavirus crisis and the resulting loss in passenger numbers, talks may be underway that could result in the United Kingdom’s government buying Flybe. Several weeks ago, on March 5th to be exact, the Exeter-based regional airline collapsed after having failed to secure a £100 million lifeline from the government.

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Ex-Flybe staff want the UK government to buy the airline. Photo: Ken Fielding via Wikipedia

Now, however, according to The Telegraph, the people brought in to handle the bankruptcy proceedings are said to be in talks with several ministers about the possibility of Flybe being nationalized. While this might have been a non-starter before the coronavirus pandemic, we are now seeing the British government roll out several measures to help businesses from failing.

EY has denied that talks are underway

According to The Telegraph, the catalyst for the talks was a letter written by more than 2,500 former ex-Flybe staff to British Chancellor of the Exchequer, Rishi Sunak. In the correspondence, The Telegraph says that the former employees pleaded with the Chancellor, asking for the British government to purchase the defunct airline so that they would be allowed to take advantage of the COVID-19 Job Retention Scheme.

The former Flybe workers also want the government to buy Flybe so that unprofitable routes that are often a lifeline for rural communities can be reinstated.

The London accountancy firm handling the bankruptcy, Ernst & Young, has denied that any talks with the British government are underway with a company spokesperson saying:

“At this time, we can confirm that there are no discussions between the joint administrators and government about taking Flybe out of insolvency.”

The spokesperson then added that it “continues to be open to approaches from all parties in order to realize returns for creditors.”

Virgin Atlantic is going to ask for help

While not wanting to get into the politics of the Flybe insolvency, it is kind of ironic that the Virgin Atlantic-led consortium that let Flybe collapse is now rumored to be asking the UK government for help.

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Virgin Atlantic is expected to ask the government for help. Photo: Tomás Del Coro via Flickr

According to the BBC, Virgin Atlantic is going to ask the government for a bailout worth millions of pounds in the coming days. This follows on from reports in the United States that airlines will get a bailout from the government, albeit with strings attached, following Congress approving a two trillion dollar coronavirus fund.

Conclusion

As the coronavirus pandemic has countries around the world in lockdown, you can’t help but get a sense that things will never be back to what we took for being normal.

Millions of people have lost their jobs due to COVID-19 and things are not going to get any better as companies begin to replace workers with machines.

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Flybe used to fly routes to regional airports. Photo: Aero Pixels via Wikipedia

While many of you might believe that government interference in business is a bad thing, just look who the private sector runs to asking for money when times are tough.

In the case of Flybe, it is obvious that its owners were only interested in flying routes that made a profit, yet if it was owned by the government that would not be the case. As a regional airline, Flybe was invaluable to local businesses and economies by not only employing people who paid taxes but also keeping the doors of regional airports open.

With this in mind, would it really be a bad thing if the government decided to nationalize Flybe? Please let us know your thoughts in the comments section.

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