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Flybe 2nd British Airline to Fail, Stranding Travelers

Reuters

   LONDON - British regional airline Flybe collapsed Thursday after a
   plunge in travel demand, making the long-struggling carrier one of the
   first big corporate casualties of the coronavirus outbreak.

   The failure of an airline that connects all corners of the United
   Kingdom with major European destinations not only puts around 2,400
   jobs at risk but could also see some airports struggle and regional
   economies hit.

   "All flights have been grounded and the UK business has ceased trading
   with immediate effect," Flybe said after the government walked away
   from a rescue package agreed to in January.

   Virus hits airlines'bottom lines

   Airlines around the world have been canceling flights and warning of a
   hit to profitability after coronavirus first emerged in China, hitting
   flights across Asia, before it spread to Europe and beyond.

   British Airways, easyJet, Virgin Atlantic, Lufthansa, Norwegian Air and
   United Airlines are among those warning about the impact of a virus
   that looks set to hit the industry harder than the 2003 SARS outbreak.

   Flybe's collapse will also cause more problems for Prime Minister Boris
   Johnson who had promised to "level up" Britain by investing in regional
   transport links.

   His government had agreed a rescue deal for the 41-year-old airline in
   January, saying it was important to maintain connections across the
   country for its 8 million passengers.

   It said on Thursday there was nothing more it could do.

   "We are also urgently working with industry to identify how key routes
   can be re-established by other airlines as soon as possible," Transport
   Minister Grant Shapps said.

   Rescue deal unravels

   Flybe, the largest independent regional airline in Europe, operated
   between 81 airports and was owned by Virgin Atlantic, Stobart Group and
   Cyrus Capital.

   The owners said they had plowed more than 135 million pounds ($174
   million) into the business in the last 14 months, including around 25
   million pounds pledged in January.

   January's rescue deal had seen the government agree to match the
   owners' support for Flybe with a potential loan, a deferral of taxes
   and a review of local flight tax rules.

   That briefly formed part of Johnson's plan to try to boost the regions
   of Britain beyond London. Without Flybe though, some regional airports
   like Exeter, Birmingham and Southampton will have much poorer
   connections.

   However, rival airlines complained that the state should not prop up
   failing companies and environmental campaigners argued any move to
   reduce the cost of flying did not fit with the government's aim to cut
   greenhouse gas emissions.

   Regional airports

   Flybe's 68 aircraft flew to airports including Belfast City in Northern
   Ireland, Jersey in the Channel Islands, Birmingham in central England
   and Scotland's Inverness and provided more than half of UK domestic
   flights outside London.

   The pilot's union said airline staff had been betrayed by the owners
   and the government.

   In a sign of the ripple effect the virus can have, Britain's biggest
   commercial free-to-air broadcaster ITV warned Thursday its advertising
   revenue had been hit by travel companies pulling spending.

   Stobart and Virgin Atlantic said they were deeply disappointed with the
   outcome.

   "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," they said.

   It is the second major British airline to go bust in six months after
   the world's oldest travel firm Thomas Cook collapsed in September,
   stranding hundreds of thousands of passengers and sparking the largest
   peacetime repatriation effort in British history.

   The country's broader airline strategy was also thrown into disarray
   last week when a court ruled a plan to expand Europe's biggest airport
   Heathrow was unlawful.