Here’s Why Flybe Wants To Retain Its Operating License

The administrators for the UK regional carrier Flybe are appealing to the government to retain the airline’s operating license. The company argued recently that the sale of the business would become unlikely if the license is revoked.

Flybe bankruptcy
Flybe wants to retain its operating license to increase the chance of achieving a sale. Photo: Getty Images

Flybe in appeal to the CAA over license revocation

Owing to numerous problems, Flybe ceased operations on 5th March. As no investors appeared, the airline voluntarily ended all operations as well as suspending it’s Air Operator’s Certificate (AOC).

Once the airline had ceased operations, the Civil Aviation Authority (CAA) announced that it would be revoking its operating license and route licenses in effect from 30th April. However, administrators appealed this revocation, and a hearing took place before the CAA panel on 16th April. Here, evidence was presented, and submissions were made on the prospect of the company being acquired as a going concern within a reasonable period.

The CAA’s panel concluded that there was no counterparty to fix the airline’s finances within 12 months and also rejected Flybe’s request for a temporary operating license for the same reason.

Following this decision, the administrators had a two-week window where they could launch an appeal. The statement of proposals states that they intend to appeal to UK transport secretary Grant Shapps.

Flybe
Flybe used to operate 36% of routes within the UK. Photo: Flybe

Would an operating license help achieve a sale?

The administrators dispute the view of the CAA, stating that they would be more likely to achieve the sale of the airline if the license was maintained.

The efforts of the administrators have resulted in over 200 interested parties. Of these, 90 issued information memoranda and generated submissions of around 20 non-binding offers. The administrators believe that a going-concern sale of the business and assets may still be possible.

Three parties have shown an interest in the business and its assets, although the company is not a legal entity. The administrators are working towards receiving and evaluating final offers in early May.

It is unlikely that a business sale, including the transfer of existing employees, will be possible if the operating license is revoked since it prevents the sale of the airport slots – which would be central to any bid for the business,” the administrators said in a statement to Flight Global.

 

Stobart ATR72
Coronavirus travel restrictions are causing a challenge for the sale of Flybe. Photo: Transport Pixels via Wikimedia

 

Several parties have shown interest in Flybe’s slots – the total value of which is uncertain. However, the administrators say they have not yet received an offer that is capable of acceptance because of the current uncertainty in the airline market. The administrators stated that they would continue to market the slots for sale, either through a group-wide sale of the business or as a separate sale process.

Coronavirus pandemic preventing a quick sale

With the current travel bans in place, the administrators point out that even though negotiations are on-going, it is proving to be challenging. The current travel restrictions coupled with depleting valuations, capital constraints, and overall diminished interest in investing in the industry, are making it difficult to complete a sale in the timeframe allowed.

Do you think Flybe should be allowed to retain its operating license? Let us know in the comments.

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