The company are quite correct that using just LIFO could be deemed illegal under age discrimination law if someone involved took the company to court.
During a similar process at bmi some years ago the BALPA CC came up with a system which slightly skewed the list based on things like disciplinary warnings and a few other factors which I can't honestly remember off the top of my head.
The result was almost LIFO but the company lawyers were happy with it. Of course it didn't get challenged in court, the people who were made redundant took it on the chin and left without a fight as far as I know so we will never know if the system they came up with was legal or not.
Good luck to all at Flybe, I know all too well what an uncertain future feels like and its not nice at any time let alone just before Christmas.