BBC Spotlight future Skills Centre
 

Looks like G-CLXC is being stripped down by Exeter Aerospace, after watching BBC Spotlight on the Future Skills Centre. Possible 'heavy' check, pre-proving flights etc.

Looks like it's all part of the jigsaw, getting the engineering skills back up and running for more to come.

It’s not G-CLXC that’s in the hangar being stripped, it’s another one from the same previous operator in the same livery that’s been in Exeter over a year for scrapping. Parts of it are for sale on EBay marketplace.

The aircraft being scrapped is G-CLMT - the former OE-LGC.

Jamie2009

There's a lot in there and it will take time to digest but it does look like EY have been doing a lot of complex work trying to put something together to help release a little more value for the creditors including staff and pensioners. Did read it correctly in that in theory, they did in theory manage to get a grip on the remedy slots at LHR? Lets hope they find a way to move on to plan B if there is one but as things stand the only winners in this are likely to be KLM/AF/HOP/AL etc as they move in an backfill work from the other end. I wonder what the CAA will actually have left to regulate in a few years.

Am I right in reading that and thinking the new Flybe basically wanted the slots and the operating license without the legacy liabilities (ie £500m of debt) from the old company? Isn't there a danger if that was approved it would have have left a very nasty precedent, i.e. If you have a bit of debt just close the company and start a new legal entity with no debt but transfer the OL and the valuable assets.

Also, legally, wouldn't ex employees taken on then had a very good legal argument regarding TUPE? And I'm not sure the new Flybe would have necessarily wanted to inherit the employment rights of the old airline.

My understanding is that this has moved well out of the realms of TUPE and any reemployment of Flybe staff would be entirely optional and without any strings.

As for the ditching liabilities and carrying on, it seems that this is quite common these days and thee are several ways of doing it. According to EY's reports, this had been considered as a sort of pre pack administration scheme early on but was dropped due to CAA and OL / AOC issues. Whatever the intentions of the original consortium, after the Coronavirus downturn hit it and given the perilous state of most airlines it would be difficult to claim that there was some kind of scam going down to avoid liabilities.

It would have been interesting to see how they / the courts would have dealt with the pension scheme though.

As for the 400-500m of creditor claims. This figure does look eyewatering but it is a bit of a distraction in that its is a raw snapshot of what was owed the day the company went bust. Had the company been able to continue then much of that debt would have been less and due spread over many years. The pension contributions for instance were due at about 4-5m per year over about 10 years and yet the failure triggered a huge wind up debt. This would happen to any Airline with a DB scheme. It would be interesting to look at a scenario with several other large airlines if they went bust due to cashflow running out. They would all immediately clock up massive debts and for some in particular, a very large pension wind up debt.

There is a long list of Flybe debts on the EY report. Many would have been to suppliers who would probably have preferred the continuation or rescue of Flybe so that they could keep cashflows and contracts. Many would prefer not to go chasing debt with little chance of reclaiming much if any at all.

It may be that the CAA are concerned that this may be just a slot buying selling exercise with a token airline attached but I would be surprised if this was the case. If there was concern then it would be easy for EY to call the purchases bluff or at least get them to show their true intentions with a no embarrassment (don't take the pi**)clause. Obviously if the purchaser was being honest about their intentions to create jobs, help the economy etc then they would have no problem with such a clause. EY did this for the sale of Stobart back to Stobart Group. Some of the unsecured creditors might take an interest in ensuring there was no pi** taking too.

If there are conditions on retaining slots and licences in the deal between FLybe (EY) and Thyme then I assume that Flybe will fall back into the hands of EY and they will have to start all over again.

The CAA might have had some concerns but reading their letter, it does seem that they are being a bit jobs-worth. Clearly its going to be very complex for EY to put together a package but given the desperate jobs market and economic downturn, they could have perhaps been a bit more helpful. It is almost as though they made up their minds and then got their lawyers to make it all fit the laws. Ironically, they seemed to rely entirely on retained EU law.
It will be interesting to see if Flybe (EY) appeals or comes back with another structure and proposal. They have extended the administration for three years so are clearly minded not to just give up.

biddedout, I'm afraid that any hope you might have of this helping the staff and creditors including pensioners is somewhat forlorn. Cyrus Capital held security to Flybe's slots so if there is any value realized by being able to transfer slots from Flybe 1.0 to Flybe 2.0 then it will only be to Cyrus.

I wouldn't be so sure about TUPE. The CAA thing makes it clear that it is a transfer of business being undertaken here, and it is possible that employment rights can be protected in such a situation despite insolvency. The legislation is pretty complicated, but I don't think you can say with certainty that TUPE doesn't apply. It might - or might not.

I'm beginning to wonder if, with the original Cyrus plan looking to be in trouble, Flybe is now at risk of being the UK equivalent of India's Jet Airways.
Former employees are likely to be finding other jobs, possibly leaving aviation altogether. I'm guessing it will take time before there is a detailed plan B - and the longer it takes before flying is expected to resume, the greater a grip competitors will have over Flybe's former markets

Albert,

I agree, TUPE is very complex and under certain scenarios it may stick but in this case I think it will be unlikely. The staff didn't qualify for furlough payments and yet in theory, they fell within the qualifying period. EY claimed it would be outside their remit and they could be breaking the law if they entertained it. If TUPE could be made to stick then that could open up a whole pension legal minefield with two more regulators sticking their noses in. I think all parties will be doing their best to tip toe around that scenario. I agree, it is a long shot for the un-secured creditors to recover much more but the slot thing is very complex and I am not sure whether a Charge will entirely capture something as legally vague as a slot. Any new start will need a big injection of cash and that person is going to understandably ensure that it is all arms length from any historical claims.

I would be delighted if out of this mess Flybe's former competitors (Loganair etc) picked up much of the generally domestic work but it would be somewhat frustrating if the likes of say KLM managed to gorge themselves on Flybe's 16 or so slots into AMS and likewise for AF in CDG. It would be a shame if Mk 2 truly intended to take those routes back on and yet the CAA just put legalistic barriers in the way and allowed companies enjoying huge state bailouts moved in instead.

Similarly for the LHR slots. The reason they were labelled remedy was presumably as a remedy against BA's stranglehold on LHR. Surely the point is that it is healthy if someone manages to wrestle them out of BA's paws and preferably into the hands of a UK business so that they can provide that competition. Virgin trid once with Little Red and then tried again with Connect but sadly that was blow out of the water by Covid. The way the CAA seem to deal with things is it is more likely they will fall into a Maltese Reg operator with HQ in the Cayman Islands using mainly wet leased aircraft from China with Australian contract crews. OK, very cynical but this is aviation and there are huge number of unemployed UK aviation workers who need a little help right now.

Which is now UK law, and so is the law that needs to be applied.

at a guess the plucky underdog venture capitalists might have employed a lawyer or two who will jump on anything that isn't compliant.

Yes, those lawyers have certainly done well over the last couple of years. :)

Well, I doubt they will be for much longer as even a person who’s seriously mentally, visually and aurally challenged, will realise that this whole exercise has been one of “smoke and mirrors” to try and grab any slots at LHR, if they ever really were Flybe’s. That argument will drone on for weeks, but what is definite is that any reemergence of Flybe has got a lot of former employees fired up to the extent that lots have spent a small fortune (in the current Covid/unemployment climate) renewing ratings in a vain hope of gaining employment. To have it (pretty much) confirmed that this was just a cynical exercise in making a shed load of cash to cover their past losses and then heading off into the sunset, is quite honestly totally in line with the way these “venture capitalists “ work. Yet again, the hardworking but naive employees get shafted and the ones controlling the purse strings walk away unscathed. I spent 15 years with Flybe and met some of the nicest, unassuming people you could hope to meet that just wanted to live and work in “the regions” and frequently went way beyond to make things work. Somebody, someday, will start an outfit that will serve the regions again which the current wannabes like Logansir and Eastern never will. I just hope that when they do, they start with a clean sheet and don’t involve any of the previous managers or investors.

If that's the cases there must surely have been cheaper ways of attempting to achieve the goal than acquiring a Dash 8? Perhaps not.

You could be right Buster but as you say, Loganair and Eastern are not going to be filling all the gaps and many of those people who had the cash were perhaps renewing their ratings just to keep their licences going as it was cheaper to do it on a sim on a familiar rating than to use a twin. In some cases, the Job Centre paid. I think most people were aware of the possibility of what might happen regarding venture capitalists but I think it will be worth waiting to see what EY have to say in their next report due early May. In the meantime, licences have to be kept refreshed and ticking over.
They (EY) appear to have been holding onto a lot of staff to keep a credible licence holding operation going. Were these people transferred across into Thyme when they supposedly took on the business or are they still employed by Flybe (EY) and were just working in parallel with Thyme? Did thyme ever complete the deal to buy or were there strings attached to ensure that it only completed when the slots had been secured (the whole portfolio not just LHR)? What is going to happen to these retained staff now? What will happen to Thyme with its one remaining director? What will happen to Connect Airways? The CA board seems to still exist and strangely it is still owned by Virgin and Stobart (with EY in control) and yet Virgin appears to still owe Flybe £10m. Still lots of unanswered questions but there must be quite a few retained staff who are in the know and are either waiting to move onto develop plan f,g,h...k, or alternatively, are a bit p***ed off as they have been taken for a ride are about to get the boot. Someone must know what's going on at the coalface.

BE in my eyes is dead and buried, was from March last year and the sooner people realise this the better. It was a failing company then and nothing I have read suggests it’s about to resurrect itself in to some type of profitable new regional airline!

Will Flybe restart.... No its dead, very dead. Its successor isn't dead and who knows whats to come..... We'll all find out in the next few weeks I expect.

Interesting that Logan Air wanted their say at the CAA meeting, obviously more bothered about a restart than they make out.

Possibly to be with Exbmi ian Woodley in talks to buy Stobart Air. Might be part of new airline

After flybe and Loganair parted company with their franchise agreement, flybe went head to head in core Scottish markets in a suicide mission to harm their former partner. It threw Loganair into a period of uncertaintly and losses as they fought to survive, until flybe gave up having lost a whole load of money in a frankly vindictive enterprise. I suspect Loganair (trading since 1962) are very concerned that having survived all of that and now being battered by COVID, the thought of a debt free and eager to challenge flybe_2 dropping back into markets Loganair need to repair their balance sheet would be a worry. Flybe not having to worry about any debts or money owed as they'd already walked away scot free. It's not a good look really.

We're assuming that LM's approach was anti - perhaps they just wanted to show them how to do it?

SWBKCB

Didn’t Loganair and their parent (Airline Investment Limited) also not wipe out a load of debts by allowing bmi Regional (who they also owned) to go bust (along with its debts) and cherry pick the best bits/routes to Loganair ? I don’t profess to know the exact detail. So not sure they can claim to be holier than thou in such matters - not sure what harm this did or didn’t do to BEE in the process in terms of the competitive environment.

I'd be surprised if Flybe even noticed when bmi Regional went out of business. Except for those who had the misfortune to work there at the time of its collapse, I'm sure the same could be said of most others.

If this is a "slot play" as rumoured, the nub of the issue is surely that this has only gone on because of the Coronavirus airport slot waivers from the 80/20 rules. If it wasn't for that, the slots would be long gone by now. I don't know what the "New Flybe" has planned but it does seem as though the Coronavirus rules might be used and abused to revive an airline which was in trouble long before we'd ever heard that dreaded C word? If that's so, I can see why others might be quite exercised about it.

Are the submissions to the CAA hearing panel in the public domain anywhere, or is there any (legal) way of obtaining them?

There is a link to something in Post #161

TOM100

Yep. And then lost a TUPE claim by the pilots they took on. Not sure that precedent would be helpful for Flybe MKII, should it ever happen.

Flybe’s administration has been extended to 3 years

I agree ASW, it does seem odd that the CAA are being extraordinarily pernickety with TO considering how easy going they are in approving so many other new ragtag multi-jurisdiction multi ownership layered so called “UK” operators to nail a brass plate on a broom cupboard door. I wonder why?

Maybe the CAA are wary of trying to make a souffle rise twice

Is allowing a company to buy the licences of a bankrupt airline solely to sell off slots that would otherwise go into a pool compatible with what an intelligent observer would regard as an orderly competitive market ? Would the CAA risk a legal challenge from other airlines if a pseudo-Flybe was allowed to revive that operated no passenger flights but did sell LHR slots before closing again ?

I don't know the answers but it must be at least on the minds of CAA and/or DfT lawyers

airsouthwest

You do always seem to be the voice of reason on here. From what I can see, your opinion makes complete sense - I am one of those hoping for the relaunch to be a success.

On a side note, it appears that Farrell, who resigned following the CAA news last month, was listed on Companies House as a 'partner' with Peachey being the 'director'. I am not experienced in this kind of business so please do correct me if I'm wrong here, but I'd guess that his departure is not the sign of failure that many news outlets want it to be. Amongst others, I remember one article which said that the airline was 'grounded' - that very same day, G-CLXC took off from Exeter!

G-ECOJ
 

G-ECOJ en-route Iceland today, still in Flybe livery.

And I believe onwards to Abbotsford BC., to be converted to an air tanker capable of carrying just over 2600 gallons of retardant. They will (sadly) replace the airline's Convair 580 fleet.

Venture Capitalism very possibly the two resonant words as answer.

..."concluded" wrongly in some instances then.

airsouthwest

The CAA report into their refusal didn't make particularly good reading for many other conclusions, IMO. They wanted to restart the airline and continue it as legal entity without any of the legacy debt. Further to that, the resignation of one of their directors around the time of that report does add fuel to the fire they were only after a few things.

It doesn't all quite add up, the EY administrators report state that whilst Flybe has been granted grandfathering rights the administrators will want to sell those to repay creditors.

If they can grab the slots and sell them we know, in pre Covid times, the value is huge. Air NZ sold their slot for $27m only last March. The potential value of the slots Thyme could gain far outweighs the costs of a few second hand Dash's and start up costs. (I appreciate they're currently only able to be used for a few destinations but I guess one could argue that was made by an EU court regulating the sale of BMI - could that be potentially challenged in a post Brexit UK courtroom?)

If they really wanted to restart an airline surely they could just buy the brand off the administrator and restart as a new legal entity / or start afresh with a clean new image?

ASW there are suggestions the Heathrow slots have somehow been unlocked from the remedy slot restrictions, which means Flybe's administrators are claiming unrestricted grandfather rights to them. Barring some almighty :mad: up at Waterside, it is very difficult to see how this could be so, but that is what I keep hearing. If true then it explains why there's everything to play for.

I got hold of the notes of the CAA hearing a couple of weeks ago. There was a very telling line on Page 54 of the script where the chap arguing Flybe's corner said "The slots are essential to the business. Without them, there is simply no business. We can't operate at Heathrow without slots. We can't operate at Schiphol without slots there. And so on."

I suppose you can't really expect them to lay out their entire business plan in a publicly recorded hearing - who would? But with that type of language being used then there's clearly still quite a lot of shouting about slots going on. It's an interesting read.