I thought the LHR slots could not be used for specific routes… ABZ EDI NCE AMS etc ?

This is frankly a bit of a guess but I think they’d still be remedy slots so the new buyer of flybe2 would have to use them for their intended purpose. It would be interesting watching LH or KL/AF trying to use some of them for UK domestic competition. They would presumably have to keep a UK AOC holder for that purpose (Flybe 3 ?). Hopefully someone who knows the score will be along to comment here in due course.

Slots aside the airline must be worth zilch as it made no money and has hardly any assets. What's stopping anyone buying the airline, taking the slots and closing everything else down?

(Assuming the slots are transferable, which is far from clear. Why did the Flybe go to such much hassle trying to claim the slots grandfathered to the old airline if they could just get their own slots so easily? That alone suggests these are just remedy slots)

The slots were originally made available as competition remedies and Flybe (V1) was deemed to have met the utilisation criteria to fly them for six consecutive seasons, at which point they can be used on any other European shorthaul City Pair. The definitions of these are:

"Europe" - The European Union, Iceland, Norway, Switzerland and the Channel Islands
"European Shorthaul City Pair(s)" - Any route connecting London with any other part of Europe (which shall, for the avoidance of doubt, include the Identified UK City Pairs)

In essence, the purpose behind the slots were originally provided to Flybe V1 (tied to Aberdeen, Edinburgh routes, independent carrier with no connection with IAG etc etc) is now no longer relevant. The slots are "owned" by British Airways and released under a Slot Release Agreement to Flybe, and the EU decided (more fool them, but that's now history) that Flybe V1 and V2 were one and the same when it came to operation of the remedy slots.

Only Flybe V2 has the rights to use those slots, so anyone wanting the slots would have to acquire Flybe V2 out of administration. This isn't like the collapse of Monarch or Thomas Cook where they had outright ownership to their slots and those slots could be sold (and were). You didn't have to buy all of Monarch Airlines (in administration) to get the slots, for instance.

If Flybe V2 is bought by an entity which is another airline, but itself ceases to exist, can the rights to use those slots be transferred out of Flybe V2 into that other airline? The answer is that I don't know, and I suspect no-one does until this is tested through legal means. There will be legal opinions flying about but until they are tested, they remain opinions and only that.

The whole thing is, at this point, even more scandalous than it was before. Cyrus Capital took a floating charge over Flybe V2's assets last year, presumably as it put more money into the venture. As a secured creditor, it now stands to realise whatever proceeds can be had from sale of the company in administration and the access to the slots within that. The rest of us get left with the tab for picking up the protective notice awards through the Insolvency Service and so the taxpayer takes a complete shafting for this alongside the poor Flybe V2 employees.

And is anybody surprised?

So the EU grandfathered the rights to the slots to Flybe 2.0 even though the CAA ruled the slots can't be transferred from the old OL from Flybe 1.0 to the new?

In which case, why did Flybe even bother defending themselves in the CAA hearing if they knew they already had them?

Good question. I'm led to believe that the EU decision didn't come through fast enough, so they had to go through the charade with the CAA. That became irrelevant as far as the LHR remedy slots were concerned once the EU had given its blessing. Why they ever did that - or indeed, why they were even involved when this is effectively a UK matter with no impact on EU trade - is beyond the pale.

Thanks.

The whole situation is such a sorry mess.

Isn't this all because the hole remedy slot thing was based on an EU Commission decision in 2012. Also, if as stated above, the slots can be used between London and the EU, it presumably is a trade or competition issue?

Presumably if AF-KL or LH can bid for Flybe v2 (and its LHR slots)... then so can AA, QR or (if it needs to be an EU airline) AY ? I imagine IAG is capable of lending AY some money for this as well aa providing a sweetener ?

What would happen if BA bid for the slots and boughs the remedy slots it provided back?

I guess they can't if already partnered up with IAG because that was the whole point of the remedy. Do these slots need to come with an AOC attached and some aircraft keeping the route alive or on life support?

It is possible that the "City sources" cited in The Telegraph article are putting AF-KLM and LH out there to try and drum up more interest from others.

I doubt LH would want another repeat of bmi.

I'm not so sure. The criteria about independence from IAG was established (and is in the Commitments) for the initial provision of these slots to a qualified entrant seeking to fly the nominated routes (ABZ, EDI etc). Given the EU decision to grandfather the lease of the slots to Flybe 2 (which is a strange concept but what it did) then the only restrictions are those now in the Slot Release Agreement between Flybe 2 and British Airways.

The main risk for BA is, I guess, that an action like that could be challenged and that it doesn't stop the whole remedy slot merry-go-round starting again. If BA can demonstrate that it provided X pairs of slots to airline Y under the remedies, it is no longer obliged to provide slots to others to fly LHR-ABZ, LHR-EDI etc. If BA was somehow using the slots itself once more, that would become more difficult and it might only be a temporary solution until the next idiot comes along. At least that's my reading of it.

It’s not really a repeat of BMI though. It’s basically buying the assets of a failed carrier. And even then the market has changed. LH failed with Lufthansa Italia but is back trying to buy ITA.

Flybe v2 had limited cash resources... so anybody owed money by Flybe v1 was maybe unlikely to try pursuing v2 for v1. Had the claim succeeded, every creditor of v1 would then make a claim against v2... followed by v2 immediately collapsing and creditors seeing just a few pennies in the pound for any debts.

AF-KL and LH are rather larger with much deeper pockets, along with the implicit Govt backing of their respective Governments.

If AF-KL or LH were to buy Flybe v2 out of adminstration... I wonder if any large Flybe v1 creditors might want to have another go at getting their money back ? I'm sure there's a legal argument to be made...find a clever KC, and see what can be achieved...

The old company in liquidation is now called FBE Realisations Ltd and those with a claim need to file it against that.

The new Flybe 2.0 was originally called Thyme OpCo before renaming themselves after the old Flybe became FBE.

Legally, you wouldn't get very far with any claim you had for the old company against the new one.

It's not overly different to football clubs going bust and the company registered at companies house changes names whilst the name of the club continues.

The argument for debt repayment would centre around the LHR slots, whether v2 paid fair value for v1 assets (ie LHR slots), and whether paying nil or peppercorn establishes any continuity, especially if there has been a historic actively traded market to value the assets. I'm still wondering if v2 petitiong the CAA for v1's LHR slots and the CAA granting v1's slots to v2 increases the legal risk of v2 potentially incurring v1's obligations

Seems a murky precedent if a new company is then determined to be liable for the debts of different legal entities.

(Even if the new company has similar directors as the old one!)

I can't think for one minute that AF or LH have any notion of running UK domestic flights. This is about slots - and was the reason for Virgin's interest in Flybe 1 at LHR. Get hold of these remedy slots - AF/KL can use them to backfill on their short-haul services and free up their own unrestricted slots to provide more expansion at LHR.

Lufthansa is in the running to acquire ITA which, as the Daily Telegraph article correctly pointed out, now has no LHR slots. A certain Abu Dhabi-based airline has leased out its spare LHR slots to anyone but ITA this year, so ITA has plans to fly to LHR but no slots whatsoever. A minor technical snag.