British regional airline Flybe Entered into Administration

British regional airline Flybe said early on Thursday it entered into administration, as the already struggling carrier failed to withstand the plunge in travel demand caused by coronavirus.

“All flights have been grounded and the UK business has ceased trading with immediate effect,” the airline said, adding that accounting firm EY had been called in to handle the administration, a form of creditor protection.

The airline’s failure puts 2,000 jobs at risk and causes a headache for Prime Minister Boris Johnson and his plan to boost regional transport links.

A UK government spokesman said the government was working closely with the airline industry to reduce any disruption to routes operated by Flybe.

Flybe is among the first airlines to go out of business since the emergence of coronavirus, which surfaced in China last year and has since claimed around 3,000 lives and sharply reduced travel demand.

Some major airlines have said they will need to cut costs to weather the downturn in bookings, particularly since late February when Europe’s worst outbreak emerged in Italy.

British Airways (ICAG.L), easyJet (EZJ.L), Lufthansa (LHAG.DE) and United Airlines (UAL.O) are amongst those announcing cost-saving measures.

Flybe was already in financial trouble before coronavirus hit.

The airline, which connects smaller UK cities, was rescued from near collapse in mid-January, when shareholders agreed to invest more money alongside UK government support for the airline.

Flybe’s current owners are Connect Airways, a consortium created by Virgin Atlantic, Stobart Group (STOB.L) and Cyrus Capital. The group have invested 110 million pounds ($141.6 million) since buying Flybe in 2019.

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