The failure of Europe’s biggest regional airline Flybe

The failure of Europe’s biggest regional airline Flybe could be the start of more casualties, analysts predict. A global airline industry body warned the financial hit from coronavirus could reach $113bn (£87bn) this year. The bleak prediction came on the same day UK-based Flybe went into administration. Airline experts are forecasting more failures as passengers cancel flights. Flybe’s collapse « will likely be the first of many in 2020, » said James Goodall, a transport analyst at Redburn. « We expect that the demand destruction caused by Covid-19 accelerated its demise and we believe further airline bankruptcies should be expected in the coming months. 

» Airlines could lose $63bn to $113bn in revenue from the slump in passenger traffic globally this year, the International Air Transport Association (IATA) said on Thursday. Last month, it had predicted losses of $29bn. Demand has plummeted, not just from holidaymakers, but from corporate travel as firms restrict business trips for employees and conferences are postponed. 

« There will be a significant increase in airline casualties in this scenario, 

» said Michael Duff, managing director at The Airline Analyst. You are required to undertake a detailed financial analysis of Flybe over the last 3 years. In your report, consider the following sections: (Conduct your own research) 

a) The company overview.

b) The financial Analysis for the last 2 years. Consider computing and analyzing profitability, liquidity, efficiency and solvency ratios.

c) Other non-financial issues pertinent to the case.

d) Critically analyse the outlook of the airline industry and make recommendations to a prospective investor interested in the airline industry.