The coronavirus is officially claiming its first corporate casualties

The coronavirus is officially claiming its first corporate casualties
Share

The people most at risk from the coronavirus outbreak are those with underlying conditions—and the same may hold true for companies.

On Thursday, the beleaguered British airline Flybe went bankrupt, with all its flights being grounded and passengers being warned not to even try going to the airport unless they have flights lined up with another airline.

A major player in travel within the U.K. and to nearby European cities, Flybe had a tumultuous decade after its 2010 IPO. Hemorrhaging money in an extremely competitive market, it was bought and bailed out a year ago by a consortium called Connect Airways, comprising Virgin Atlantic, Stobart Aviation and Cyrus Capital Partners.

However, Flybe’s ongoing losses led it to ask the British government for what was effectively a rescue loan (and technically a deferment of a massive tax bill) at the start of this year. Much to the outrage of Flybe’s rivals, the government agreed—but then it failed to follow through. According to the Independent, the end was triggered this week by a fuel supplier cutting off Flybe’s credit, which then led airports to start impounding its planes.

Flybe may have been in irredeemable financial difficulties anyway, but it was the coronavirus outbreak that ultimately killed it. That much was made clear in this statement from Virgin Atlantic:

“With customers and staff at the front of our minds, over the past 14 months the consortium has invested more than £135 million [$174 million] to keep the airline flying for an extra year, maintaining 2,400 people in employment and ensuring customers could keep travelling…Sadly, despite the efforts of all involved to turn the airline around, not least the people of Flybe, the impact of COVID-19 on Flybe’s trading means that the consortium can no longer commit to continued financial support.”

The coronavirus pandemic (as governments are now labeling it) has been threatening devastating effects on airlines, due to travel restrictions and passengers’ increasing desire to stay away from crowded planes and airports.

Source: Fortune

Submit a Comment