Sky News has learned that Cyrus Capital, a hedge fund with offices in Mayfair, is behind a plot to reacquire some of Flybe’s assets, despite the devastating impact of the coronavirus pandemic on the aviation industry British.
Cyrus Capital, which is headed in Europe by Lucien Farrell, is reportedly in talks with EY – which was appointed to handle the company’s insolvency in March – over a deal.
He is said to want to relaunch a smaller version of Flybe next year, although the precise timeline is subject to a resumption in passenger demand and the removal of coronavirus-related quarantine measures.
Flybe was the largest regional airline in Europe, carrying around 9 million passengers per year and accounting for 40% of domestic flights in the UK.
It served over 80 airports across Great Britain and Europe, including locations such as Belfast, Birmingham, Exeter, Manchester and Southampton.
He fought a frantic battle for survival, securing a bailout deal involving Cyrus Capital, Virgin Atlantic Airways and Stobart Group, the owner of Southend Airport, early last year.
However, he experienced further financial turmoil in January, with mounting losses prompting him to approach the government to ask for emergency financial support.
Despite premature public comments from cabinet ministers, including Transport Secretary Grant Shapps that a deal had been struck to keep Flybe up in the air, weeks of talks over a £ 100million state loan sterling have failed.
Opponents of a government funding program were led by Ryanair boss Michael O’Leary, who called it “a billionaire bailout” in reference to Sir Richard Branson’s involvement in Flybe ownership.
The company eventually brought in directors in early March, causing more than 2,300 job losses, with Virgin Atlantic’s refusal to inject new funds being the possible catalyst for its collapse.
Virgin Atlantic was forced to seek its own rescue this year following the international air transport crisis.
More than a dozen Flybe routes have been taken by Loganair, another regional carrier, although many remain vacant.
More details on Cyrus Capital’s plans to revive Flybe, including whether he would seek to use the defunct airline’s name, were unclear this weekend.
A number of former Flybe executives are believed to be involved in the relaunch project.
The hedge fund held a 40% stake in Connect Airways, Flybe’s parent company, before its insolvency.
It was also the largest secured creditor, according to an administrator’s report, with £ 53million in loans outstanding at the time of EY’s appointment.
Cyrus Capital and EY declined to comment.
In addition to the Virgin Atlantic-funded bailout deal, International Airlines Group, owner of British Airways and Aer Lingus, has asked shareholders for more than £ 2bn in additional equity since the start of the COVID-19.
Sky News revealed earlier this month that easyJet has warned the government that it may need additional state support beyond its access to the Bank of England’s coronavirus funding program
Further evidence of the continuing crisis in the aviation sector was provided over the weekend as the UK’s largest airport entered a new phase of consultation with employees, increasing the possibility of loss of substantial jobs.
Heathrow Airport has been consulting with unions since early last month over revised compensation agreements for thousands of employees, but the 45-day statutory period expired on Friday with no agreement in place.
This will involve one-on-one consultations with a maximum of 4,700 affected employees, although the number of possible job losses will be significantly lower than this.
Kathryn Leahy, Chief Operating Officer at Heathrow, said: “In order to ensure that our business recovers from this crisis and is sustainable and competitive in the future, changes must occur.
“Over the past 45 days, we have had formal talks with our unions, but we have not been able to come to an agreement.
“As we continue to talk, we must now take the next step in this process with our colleagues. ”
She added that Heathrow, which has seen passenger numbers drop this year, had “a new future ahead of it and to be competitive we need to create cost savings across the business”.
Ms Leahy insisted that the company’s salary offer meant there was “a job for anyone who wants one.”
Heathrow’s plan is to equalize wages, with a ‘buy-back’ offer – for those whose wages will be cut – involving payment of the difference in a lump sum or in monthly installments over a two-year period.
The airport told unions that while no further compensation deal will be considered before the start of 2023, it would be reconsidered if passenger numbers returned to at least 80% of 2019 levels over three consecutive months from the same. three month period in 2019..