Monday 13 January 2020
Is Flybe on the brink?
UK regional airline Flybe is in crisis talks as it tries to secure emergency funding, according to a report by Sky News.
The British government is considering supplying the airline with additional funding, while accountancy firm EY is “on standby” to handle the airline’s potential administration, Sky News reports, citing unnamed sources.
Exeter-based Flybe, the UK’s largest regional airline, has been on lessor watchlists since its near-collapse at the beginning of 2019. The airline accepted a last-minute bailout from Connect Airways – a joint venture between Virgin Atlantic, UK infrastructure giant Stobart Group and Cyrus Capital Partners (Cyrus) – in a £2.8 million ($3.6 million) deal that saw its equity valued at just a penny a share. The previous day’s closing price had been 16.38p. Under the deal, Flybe is to be rebranded as Virgin Connect in 2020.
Cyrus is the largest shareholder of the joint venture at 40%, with Virgin Atlantic and Stobart Group taking 30% each. Connect Airways also supplied an £80 million ($103.7 million) injection, along with a £20 million ($25.9 million) loan, to assist Flybe in its restructuring.
Flybe has blamed its weak financial position on a weak pound and political uncertainty following Brexit, as well as rising fuel costs.
Flybe said it is continuing "to provide great service and connectivity for our customers while ensuring they can continue to travel as planned" and that it does not "comment on rumour or speculation" when contacted by Ishka. Virgin Atlantic similarly told Ishka it is “not commenting on speculation”. Stobart did not have any comment when connected by Ishka. EY and Cyrus did not respond to Ishka’s request for comment.
A Q400-heavy fleet
Flybe currently operates a fleet of 72 aircraft of which 72% are leased, according to CAPA Fleets. Nordic Aviation Capital (NAC) has the highest single exposure to Flybe with 20 aircraft, or 38% of Flybe’s leased fleet. All of NAC’s leased Flybe fleet, bar one ERJ175, are Q400s with an average age of 12 years.
Lessor/Owner | Manager | Aircraft | MSN | Reg. Number | Age | Engine Model | Notes |
---|---|---|---|---|---|---|---|
Avation | Avation | ATR 72-600 | 1277 | G-FBXB | 4.333 | PW127M | Last commercial flight 21st December 2019 |
Avation | Avation | ATR 72-600 | 1260 | G-FBXA | 4.333 | PW127M | Parked at Exeter. Last active 8th November 2019. |
Chorus Aviation | Chorus Aviation | DHC-8Q-400 | 4216 | G-ECOF | 11.583 | PW150A | |
Chorus Aviation | Chorus Aviation | DHC-8Q-400 | 4221 | G-ECOH | 11.5 | PW150A | |
Chorus Aviation | Chorus Aviation | DHC-8Q-400 | 4224 | G-ECOI | 11.417 | PW150A | |
Chorus Aviation | Chorus Aviation | DHC-8Q-400 | 4230 | G-ECOK | 11.333 | PW150A | |
Chorus Aviation | Chorus Aviation | DHC-8Q-400 | 4237 | G-ECOO | 11.167 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4077 | G-JEDM | 16.75 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4085 | G-JEDP | 16.167 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4087 | G-JEDR | 16 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4088 | G-JEDT | 15.917 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4090 | G-JEDV | 15.75 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4093 | G-JEDW | 15.583 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4180 | G-ECOA | 12.25 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4185 | G-ECOB | 12.83 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4187 | G-PRPA | 12.83 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4191 | G-PRPG | 12 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4195 | G-PRPF | 11.917 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4204 | G-PRPI | 11.75 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4209 | G-PRPE | 11.667 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4212 | G-ECOE | 11.667 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4323 | G-PRPH | 9.583 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4332 | G-PRPD | 9.417 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4333 | G-PRPB | 9.333 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4338 | G-PRPC | 9.25 | PW150A | |
Flybe | Flybe | DHC-8Q-400 | 4380 | G-PRPL | 8.5 | PW150A | |
Flybe | Flybe | ERJ175 | 17000359 | G-FBJK | 6.833 | CF34-8E5G01 | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4179 | G-JECZ | 12.25 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4197 | G-ECOC | 11.917 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4201 | G-KKEV | 11.833 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4206 | G-ECOD | 11.75 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4220 | G-ECOG | 11.5 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4229 | G-ECOJ | 11.333 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4233 | G-ECOM | 11.25 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4251 | G-ECOT | 10.917 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4257 | G-FLBC | 10.75 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4259 | G-FLBD | 10.75 | PW150A | |
HEH Aviation Management | HEH Aviation Management | DHC-8Q-400 | 4261 | G-FLBE | 10.667 | PW150A | |
Hong Kong Aviation Capital | Falko | ERJ195 | 19000143 | G-FBEI | 12.83 | CF34-10E7G07 | Parked at Exeter. Last commercial flight 17th December 2019. |
Nordic Aviation Capital | Nordic Aviation Capital | ERJ175 | 17000344 | G-FBJG | 7.667 | CF34-8E5G01 | Last commercial flight 11th November 2019 |
Nordic Aviation Capital | Nordic Aviation Capital | ERJ175 | 17000351 | G-FBJH | 7.333 | CF34-8E5G01 | Parked at Exeter. Last commercial flight 23rd November 2019. |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4113 | G-JECK | 14.167 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4114 | G-JECL | 14.83 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4118 | G-JECM | 13.917 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4120 | G-JECN | 13.833 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4126 | G-JECO | 13.583 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4136 | G-JECP | 13.25 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4139 | G-JECR | 13.167 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4155 | G-JECX | 12.833 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4157 | G-JECY | 12.833 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4188 | G-PRPM | 12.83 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4203 | G-PRPK | 11.833 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4213 | G-PRPN | 11.667 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4214 | G-PRPO | 11.583 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4242 | G-ECOP | 11.83 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4248 | G-ECOR | 11 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4253 | G-FLBA | 10.667 | PW150A | |
Nordic Aviation Capital | Nordic Aviation Capital | DHC-8Q-400 | 4255 | G-FLBB | 10.833 | PW150A | |
Nordic Aviation Capital (Sublessor: Republic Airlines) | Nordic Aviation Capital | DHC-8Q-400 | 4202 | G-PRPJ | 11.833 | PW150A | |
Ravelin Jet Leasing 1 Ltd | Falko | ERJ195 | 19000120 | G-FBEG | 12.25 | CF34-10E7G07 | Last commercial flight 26th October 2019 |
Ravelin Jet Leasing 1 Ltd | Falko | ERJ195 | 19000155 | G-FBEJ | 11.917 | CF34-10E7G07 | |
Ravelin Jet Leasing 1 Ltd | Falko | ERJ195 | 19000128 | G-FBEH | 12.25 | CF34-10E7G07 | Parked at Exeter. Last commercial flight 17th December 2019. |
Ravelin Jet Leasing 1 Ltd | Falko | ERJ195 | 19000168 | G-FBEK | 11.833 | CF34-10E7G07 | |
Unknown Lessor | Unknown Lessor | DHC-8Q-400 | 4089 | G-JEDU | 15.917 | PW150A | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000326 | G-FBJA | 8.583 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000327 | G-FBJB | 8.583 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000328 | G-FBJC | 8.583 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000329 | G-FBJD | 8.417 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000336 | G-FBJE | 7.833 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000341 | G-FBJF | 7.667 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000355 | G-FBJI | 7.167 | CF34-8E5G01 | |
Unknown Lessor | Unknown Lessor | ERJ175 | 17000358 | G-FBJJ | 6.833 | CF34-8E5G01 | |
Source: CAPA Fleets, Flightradar24. |
Click here to download the table.
Three-quarters (75%) of Flybe’s current fleet and two-thirds (66%) of its leased fleet are midlife Q400 aircraft with an average age of 12.1 years. 14% are Embraer 175s and 7% 195s with an average age of 7.9 years and 12.2 years respectively; Flybe announced in April 2019 that it would be phasing Embraer aircraft out of its fleet through 2020. The airline, which began life in 1979 as Jersey European Airways, has been in the process of reducing its fleet count to 70 in 2020, down from a May 2017 peak of 85 aircraft. The remaining 4% of the fleet comprises of ATR 72-600s with an average age of 4.2 years.
Five of Flybe’s leased aircraft are currently parked or stored, according to CAPA Fleets: one ATR 72-600 managed by Avation (MSN 1260); three Falko ERJ195s (MSN 19000143, 19000128, 19000155); and one ERJ175 leased from NAC.
The Ishka View
Flybe has been an airline of concern for a few years now, only surviving a near-collapse at the beginning of 2019 by accepting a cut-throat undervaluing of its assets and operations. Lessors with aircraft placed with the airline are likely to have been prepared for the possibility that Flybe could fall over.
If reports are true that Flybe is indeed in danger of collapse, then this is would be particularly bad news for lessors with Q400s. According to CAPA Fleets, Flybe flies 10% of the world’s active Q400 fleet, meaning any potential bankruptcy would flood the market and make it challenging for lessors to achieve competitive lease rates on their repossessed aircraft – or any other mid-life Q400s for that matter. Lease rates for 10 to 12-year-old Q400s were around $190,000 at the beginning of last year, Ishka reported (see Insight: ‘Turboprop leases rates: Fewer lessors help ATR and Q400 lease rates stabilise’).
As for Flybe’s Embraer jets, the UK regional airline is not the only one to be phasing out E195s. Other carriers, including JetBlue, Copa Airlines, American Airlines and Azul, plan to remove the jets from their fleet by 2025 (see Insight: ‘Used Embraer E190/E195 E1 lease rates to come under pressure’). Lessors repossessing E195s and looking to re-market them can expect heavy competition.
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