Another Airline Bites The Dust: Flybmi Collapses
Flybmi is the latest airline casualty to hit the news, with its 16 February 2019 collapse leading to many passengers being stranded throughout Europe. This news follows on from Ryanair’s profits warning which was announced in early February and Thomas Cook’s decision to sell off its airline brand.
UK Domestic Airline Sector In Crisis?
Investors contemplating strategies for the short or long term would probably be well advised to steer clear of the airline sector at this moment. As can be seen from the above, domestic airlines clearly appear to be struggling. Flybmi attribute their collapse to existing uncertainties surrounding Brexit and increases to fuel prices and carbon costs.
Although Flybmi was not a major airline, it did fly to 25 European cities from various UK airports and operated a government-subsidised service between the City of London and Derry, Eire.
This is bad news for UK consumers, as well. Rory Boland is the travel editor for Which? and commented that customers have claimed that Flybmi were selling tickets in the hours leading up to the news of their collapse. He said that the company knew “full well those tickets would never be honoured” and that “passengers will rightly be outraged if this is proved to be the case“.
Flybe is another regional airline which has hit the news in recent months and is just in the process of being taken over by the Connect Airways consortium. Virgin and the Stobart Group are major players in the takeover consortium, and the deal is currently seeking shareholder approval.
However, shareholders are up in arms about the paltry 1p per share offer Connect made. With majority shareholder Hosking Partners currently seeking to block the sale to Connect. Flybe shareholders feel that they have been taken for a ride by the airline as it was not transparent about the financial difficulties it was experiencing late last year.
It remains to be seen whether any similar rescue deal will be proposed for Flybmi, although as it is a privately owned company there shouldn’t be any similar shareholder revolt problems.