I suspect the management knew the business was unsustainable and beyond help, the question is how you manage that fact. Sometimes you can come into a failing business and say all the right things about turning it around, but enthusiasm and ambition are not enough. A re-brand of an existing incomplete re-brand is a pointer to lack of strategic direction. A revolving door at senior level is another, and the rapid opening and closing and reopening of routes and bases can show how a business is ruthless about making money, but in this case shows a lack of belief in what;s going to work, as every way they turned, the results were underwhelming against their debt.
Shareholder value has gone, indeed the very rationale for being in business at all has been changed as they now want to be a feeder for a larger brand but the mechanism to accomplish this on the scale needed just is not there.
However it's very political now and given the PM's intent to re-balance towards the regions, you can see how flybe threw the dice and screamed "The regions will blame you if you don't let us pocket the tax we collected!" It's sneaky but it will probably work.