Administrators to Flybe have dashed employees’ hopes that the government’s COVID-19 furloughing scheme could be used to salvage the collapsed regional airline.
Sky News has obtained an email sent by EY, the accountancy firm, to Flybe employees saying that the company “does not have the financial resources left in the business to fund the costs of implementing and operating the [Coronavirus] Job Retention Scheme”.
Insolvent companies are eligible to use the furloughing programme, with workers at the restaurant chain Carluccio’s enrolled for it following its collapse on Monday.
The administrators’ verdict will come as a further blow to thousands of former Flybe employees who implored the chancellor, Rishi Sunak, last week, to help save the company.
Flybe was Europe’s largest regional carrier, carrying nine million passengers annually and accounting for 40% of all UK domestic flights.
Employees’ hopes had been raised by the Treasury’s decision to allow companies to place companies on government-subsidised leave, with payments being applied retrospectively from March 1.
Flybe collapsed into insolvency on March 4, following weeks of talks with the government about an emergency loan package.
In their letter to Mr Sunak, the former staff wrote: “Your government has committed to ‘levelling up the country’ and to supporting regional connectivity.
“In these difficult days, weeks and months this country will need the transport infrastructure that only Flybe can offer, which in turn will stimulate our economy not only through this connectivity but also by protecting jobs for pilots, cabin crew, engineers and support staff through airports and local suppliers.”
EY’s message to employees emphasised that it had a legal duty to manage the business in the interests of creditors.
“Due to severe financial difficulties that had built over many months, Flybe Limited (“the Company”) was unable to continue to trade and was placed into administration.
“We understand that this is a difficult time for all Flybe employees and ex-employees and we aim to support as best as possible whilst carrying out our legal duty as administrators.”
EY also denied a weekend newspaper report that it was in discussions with the government about taking the company out of insolvency.
Sky News revealed this week that the big four accountancy firm had also been hired by the Department for Transport to advise on further bailout requests from the aviation industry.