EMBATTLED airline Flybe appeared to have all but collapsed last night as the firm's long-running survival bid seemed to be heading for failure.

An official announcement that the regional carrier — the largest operator of routes within the UK and one which is vital to a number of smaller airports — has entered administration is expected.

Late last night Flybe's website was unavailable and social media posts carried images of seizure notices placed on grounded Flybe aircraft.

The firm's troubled start to the year took a rapid turn for the worse yesterday morning when reports emerged that discussions between the airline and the government over a £100m loan had come to naught.

The loan had become increasingly vital to the airline as coronavirus fears took their toll on passenger numbers, and an already debt-laden balance sheet.

As rumours spread of an imminent collapse, the cancellation of a Flybe flight from Manchester to Southampton as it was taxiing away from the terminal appeared to confirm the worst fears. The failure of the airline, which served more than a hundred destinations, has put more than 2,000 jobs at risk.

The airline's slow demise began last year when it had to be rescued from insolvency by Connect Airways — a consortium made up of Virgin Atlantic, Stobart Air and Cyrus Capital.

It was granted a further stay of execution in January, when then-business secretary Andrea Leadsom and Flybe bosses agreed a package of measures, including deferral of air passenger duty payments and a potential loan in exchange for a £30m cash injection from the consortium.

The salvage deal itself was a matter of significant controversy, with many rival firms questioning what it saw as an inappropriate use of taxpayer funds.

But with any changes to air passenger duty forbidden until the end of the UK's transition period under EU state aid rules and the impact of Covid-19 on traveller numbers, the firm ran out of lifelines.

Flybe provided a vital regional air link around the UK and is crucial to the viability of a number of UK airports.

According to Cirium Data, Flybe flights accounted for 95 per cent of departures from Southampton airport in 2019, as well as nearly 80 per cent at both Belfast City and Exeter. Other UK carriers will be assessing the value of Flybe's landing slots at regional airports over the coming days. Exeter MP Ben Bradshaw said the collapse, hastened by the government's decision not to offer the loan, made "a mockery of [Boris] Johnson's 'levelling up' rhetoric".

£ CONTINUES ON P2 CONTINUED FROM FRONT PAGE Labour's shadow transport secretary Andy McDonald said the collapse would "cause real anxiety in many regions throughout the country".

But during the crisis in January, Ryanair boss Michael O'Leary weighed in on the government's proposed loan, saying in an interview with the Times: "If Branson and Delta (part owners of Virgin Atlantic) won't put their hands in their pockets, why should the taxpayer?" EY is expected to handle the administration once it is announced.

As the news became clear late last night, the Press Association reported that planes were not being refuelled.

Virus fears have hit consumer confidence, with knock-on effects on travel. A number of airlines have cancelled flights to ready for an extended period of lower demand, while British Airways is attempting to hold on to business by removing its cancellation fees on holidays booked now.

The pressures on aviation travel operators saw Thomas Cook collapse in similar dramatic late night circumstances last year.

Eastern Airlines and Blue Island, which operate routes from Flybe, are not part of the administration.

(c) 2020 City A.M., source Newspaper