Originally Posted by
Weathergirly
Thank you, and thank you to Copenhagen and davidjohnson6. I don't think the planned reduction in headcount is any real surprise, especially considering the situation that currently exists at FlyBe. Going back to last autumn once the credit card companies started ramping up their holdbacks the writing was on the wall for FlyBe as an independent company. Airlines are very much hand-to-mouth organisations and if the revenue stream is curtailed in any way they quickly become insolvent. In the US an announcement that the holdbacks are increasing is usually code for a very quick progression to a Chapter 11 filing. Amazingly enough this usually involves the same credit card companies giving debtor in possession financing for the filing. Under UK insolvency rules this isn't an option as once the administrators are called in the airline's AOC is suspended, they essentially are no longer an airline. They have to stop flying and get rid of all of their slots. In this case Flybe estimated how long they had with their reduced/delayed revenue stream and put themselves up for sale. The original Connect offer was based on the holdbacks being held and/or reduced once the offer was accepted. However, it this did not happen, and the may have been increased. This forced the hand in the quick sale of the actual airline and website. The bridge loan became day-to-day critical. It is also why tentative proposals from people such as Tinker are very hard to consider. As soon as you seriously consider them the connect investors will call in the bridging loan. If you don't have the cash to pay it you have to call in the administrators, so the offer has to be guaranteed to be worth following up.
The end result is that anyone who wants Flybe to walk away from the Connect deal not only has to cover the bridge loan and immediate future operational needs, but also has to be prepared to cover any further increase in holdbacks from credit card companies, which are certain to happen if the uncertainty as to debt payment were to increase any further.