Shapps supports decision by the CAA to revoke Flybe’s operating licence – losing its Heathrow slots
Flybe collapsed into administration in March 2020. It had some slots at Heathrow because it was given them under “remedy” procedures aimed at preventing British Airways from dominating the market. The (how many?) pairs of slots, which prior to the pandemic changed hands for up to £52 million each are still believed to be worth about £10m despite the impact of coronavirus. When Flybe failed, the slots were allocated back to BA last summer. Flybe still had the right to access them – but only if the airline had an operating licence after June 3. But now Grant Shapps has supported a decision by the Civil Aviation Authority to revoke Flybe’s operating licence. The slots therefore remain with BA. Had Flybe been granted the licence, it could have meant a lot of money of hedge fund manager, Lucien Farrell of Cyrus Capital. Flybe has been bought by a new company called Thyme Opco, now called Flybe Limited. It hopes to resurrect the brand (though it has always made a loss) and wanted those valuable slots, but has been awarded separate but less valuable slots at Manchester and Birmingham airports.
Shapps stops hedge fund boss from cashing in on Flybe’s Heathrow slots
Transport Secretary backs Civil Aviation Authority’s decision to revoke operating licence for the failed airline
By Oliver Gill,
CHIEF BUSINESS CORRESPONDENT (Telegraph)
6 June 2021
Grant Shapps has intervened to prevent a Mayfair hedge fund manager from cashing in on take off and landing slots at Heathrow owned by Flybe worth tens of millions of pounds.
The Transport Secretary supported a decision by the Civil Aviation Authority to revoke Flybe’s operating licence on Thursday.
Had the decision not been rubber-stamped, Lucien Farrell of Cyrus Capital would have been free to transfer slots at Heathrow airport to a new company hoping to resurrect the Flybe brand after June 3.
Mr Farrell – whose friends include Ben Elliot, the nephew of the Duchess of Cornwall and co-chairman of the Conservative Party – could then have sold seven pairs of slots, which prior to the pandemic changed hands for up to $74m (£52m) each. They are still believed to be worth about £10m despite the impact of coronavirus.
Flybe collapsed into administration in March 2020 with the loss of 2,000 jobs. Cyrus previously owned the carrier alongside Sir Richard Branson’s Virgin Atlantic and what was called Stobart Group, the owner of Southend Airport.
Cyrus acquired the airline’s assets last autumn through a new company called Thyme Opco. The company said that it aimed to restore regional air links and help the British economy recover, but it faced a key hurdle in gaining an operating licence.
The slots in question were handed to Flybe under “remedy” procedures aimed at preventing British Airways from dominating the market.
When Flybe failed, the slots were allocated back to BA last summer. Flybe still had the right to access them – but only if the airline had a operating licence after June 3. At this point, Mr Farrell could have sold them on.
Because it was in administration, Flybe’s operating licence was revoked by the Civil Aviation Authority in February. But the revocation was not official until the decision was confirmed by Mr Shapps.
Although Thyme Opco has been granted an operating licence, this does not entitle it to take over the Flybe remedy slots at Heathrow. Lawyers working for the administrator EY told regulators in February that “the slots are essential to the business”.
It is understood that Thyme Opco, now called Flybe Limited, has been awarded separate but less valuable slots at Manchester and Birmingham airports.
A spokesman for EY said: “The decision will not impact the wider administration or the sale of the company’s business or assets to the purchaser, Flybe Limited, formerly known as Thyme Opco Limited. The new entity, Flybe Limited, is independently and separately licensed by the Civil Aviation Authority, and will continue to hold a valid and active licence.”
Industry watchers remain sceptical however of Flybe’s chances of returning to the skies.
The airline, Europe’s biggest regional carrier, was perennially loss-making and suffered from customers being charged twice for air passenger duty when flying return journeys on domestic UK routes.
This made it difficult to compete with other modes of transport such as trains. Cyrus Capital declined to comment.
Flybe secures Heathrow slots for Scottish services
By Cirium (Flight Global)
30 April 2021
Reborn UK regional carrier Flybe has secured 86 summer-season slots at London Heathrow airport that it plans to use for services to Edinburgh and Aberdeen in Scotland.
Data published by airport slot co-ordinator ACL on 26 April shows the carrier received the slots from British Airways for the period of 28 April to 30 October. It lists the aircraft to be utilised as a De Havilland Canada Dash 8-400.
The original Flybe operations ceased flights in March 2020
Cirium’s data shows that Flybe purchased a Dash 8-400 with Pratt & Whitney Canada PW150A engines from Austrian Airlines on 22 January.
BA was required to provide the slots because of an agreement with European Commission that obliges the IAG-owned carrier to supply slots to any competitor seeking to begin services on certain routes from Heathrow, as part of its takeover of BMI in 2012.
The sale of Flybe to a company associated with Cyrus Capital completed on 13 April, allowing it to push ahead with plans to launch a new network and operations over the summer.
Previously known as Thyme Opco, the new company has been renamed Flybe Ltd.
“Subject to further success with vaccinations and relaxation of travel restrictions, we plan to launch a new and much improved Flybe sometime this summer on many of our former routes where there remains a critical need for a strong, reliable, and customer-focused airline,” it said on 15 April.
Although the initial airline will be smaller than the previous Flybe, it plans to “grow, create valuable jobs, and make significant contributions to essential regional connectivity in the UK and EU”.
The UK airline collapsed in March last year and its assets, including the company’s airport slots, were handled by administrators EY until the sale.
Prior to falling into administration, Flybe carried around 8 million passengers a year across a network of 81 airports in the UK and elsewhere in Europe, using a fleet of mainly Dash 8-400 turboprops.
Flybe collapses, despite huge investment by its owners – it is not getting more UK government cash
UK airline Flybe has collapsed into bankruptcy after months of talks with the government failed to secure a £100m loan. All flights have been cancelled. It was financially very weak, and the outbreak of Coronavirus hit its demand hard, speeding its demise. About 2,000 staff jobs are at risk. The government had rejected the idea of a state loan to the airline. Flybe had been told there might be a cut in Air Passenger Duty on domestic flights, but that would not happen fast enough to save the failing airline. Flybe was taken over in 2019 by “Connect Airways”— a consortium of Virgin Atlantic, Stobart Air and hedge fund Cyrus Capital – to prevent it falling into administration. Connect agreed in January to invest £30m into Flybe to continue operations, as part of a government rescue package that included APD cuts. Virgin Atlantic had invested over £135 million in Flybe to try to keep it going; that includes about £25m of the £30m committed in January 2020, alongside a “time to pay” arrangement with the Treasury on air passenger duty of £3.8m. Flybe’s administration follows last year’s failure of Thomas Cook, which also went bankrupt. Unless other airlines take up the Flybe routes, demand at many UK regional airports (eg. Southampton, Exeter, Newquay) will be hugely reduced.