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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Coronavirus crisis drags down Flybe, as Wall Street slides again – business live

The opening bell at the New York Stock Exchange today, as stocks fell sharply
The opening bell at the New York Stock Exchange today, as stocks fell sharply Photograph: Johannes Eisele/AFP via Getty Images

Finally, here’s our latest news story on the crisis:

One tiny comfort - the Dow didn’t lose a thousand points today.

But it came close! It just closed down 970 points, or over 3.5%, as this week’s highly volatile trading continues.

Updated

Ouch. Again.

Here’s a catch-up on coronavirus, as the global infection total heads towards 100,000:

Stocks are sliding as more cases are reported in the US, with the death toll now at least 11.

Traders aren’t cheered by the news that the US Senate has approved $8.3bn in new funding for America to tackle the expanding coronavirus outbreak; the legislation has gone to Donald Trump for his signature.

Here’s we go again (again).

With a hour’s trading left, the Dow is on track for another hefty loss.

It’s currently trading at 26,055 points, down 1,035 or 3.82%. That means pretty much all Wednesday’s rally has been swept away.

Full Story: Government defends role in Flybe collapse

Empty check-in desks at Exeter Airport today
Empty check-in desks at Exeter Airport today Photograph: Geoff Caddick/AFP via Getty Images

After another busy day.... here’s our latest news story on the collapse of Flybe, by Gwyn Topham:

The government has defended its role in Flybe’s collapse, as business groups, trade unions and passengers around the country voiced dismay at the loss of the UK’s biggest regional airline.

Flybe went into administration in the early hours of Thursday morning, with the loss of 2,400 jobs, less than two months after the government announced a rescue deal, having promised to “level up” Britain by investing in transport links.

The impact of the coronavirus on flight bookings proved the last straw for the Exeter-based Flybe, which had operated almost 40% of UK domestic flights, as the government stalled on a controversial £100m loan. Flybe was the fourth UK airline to go bust in a little over two years, following just months after the demise of travel group Thomas Cook.

While cabinet ministers raced to announce they had saved Flybe in January, when the airline flirted with bankruptcy, it was left to the transport minister Kelly Tolhurst to defend the government’s actions in the Commons on Thursday. She said the government had been working “tirelessly” with Flybe’s owners Connect Airways – a consortium of Virgin Atlantic, Stobart Air and the hedge fund Cyrus Capital – since then.

Existing problems had been compounded by the coronavirus outbreak which had a “significant impact on demand”, Tolhurst said. “The directors, therefore, decided it was not viable to keep Flybe operating.”

More here:

The coronavirus crisis has forced Starbucks to stop customers bringing in their own cups.

The coffee chain is “temporarily suspending” the programme, which gives a small discount to encourage people to be environmentally friendly.

Apparently you’ll still get the discount if you arrive with your own receptacle - but you’ll get the drink in a new plastic cup.

The coronavirus outbreak has also struck commodity pricing agency S&P Global Platts, forcing staff to be sent home.

Reuters has the story:

S&P Global Platts told employees at its Canary Wharf office in London to work from home until further notice after a visitor was diagnosed with the coronavirus, the company said.

“Platts has a robust business continuity plan to ensure there are no disruptions to our MOC (market-on-close) price assessment process and the essential commodity market intelligence our customers rely on across news and analytics,” a company statement said.

Platts said about 1,200 employees work in that office. Britain has so far registered 115 cases and reported its first death from the coronavirus on Thursday.

There are also some anecdotal signs that fewer financial workers are heading into the City right now -- perhaps because banks are experimenting with home working?

Business figures and politicians around the UK have warned that Flybe’s collapse could lead to severe consequences for regional economies following the loss of key air transport links.

My colleagues Steven Morris and Joanna Partridge report:

Exeter-based Flybe operates nearly 40% of the country’s domestic flights and there were fears over the impact of its collapse from around the country. In the south-west, Flybe’s failure was met with alarm that there could be substantial ripple effects financially.

“A huge pack of cards has just fallen over,” said Tim Jones, chairman of the South West Business Council. Jones said that if the services the airport provided were not replaced quickly – and lost jobs restored as well – the result could be losses of up to £600m a year to the regional economy.

Exeter airport – where all but one of the scheduled departures on Thursday was supposed to be a Flybe service – is an important hub not just for holidaymakers but for business people who use it to hop to London and other major cities in the UK and Europe. It is also used by people flying in from other parts of the UK to work on infrastructure projects for a week at a time, such as the Hinkley Point nuclear power plant site on the Somerset coast.

Back on Wall Street, the sell-off is gathering more momentum.

The Dow is now down 3.7%, or 1,010 points at 26,080. Before this crisis began, a 1,000-point move was very rare -- occurring only three times before.

We’ve now seen four in the last fortnight (two up, two down), and could be on track for a 5th.

Volatility, of course, is up:

Carney: Policymakers will deliver a "powerful and timely" response

Outgoing Bank of England governor Mark Carney has pledged that global policymakers will deliver a “powerful and timely” response to the economic damage caused by the coronavirus.

Speaking in London tonight, Carney tries to calm market concerns, saying the Bank is in talks with the UK Treasury (finance ministry) to plan its response.

Carney declared:

The Bank will take all necessary steps to support the UK economy and financial system, consistent with our statutory responsibilities.

Our policy arsenal includes monetary policy instruments, special liquidity facilities, and macroprudential tools. We are also coordinating with HM Treasury to ensure that any initiatives are complementary and that they will collectively have maximum impact, consistent with our independent responsibilities.

And lines of communication are wide open with our international colleagues at the G7, G20 and the IMF. While there will be differences in the exact timing and form, the collective impact of our efforts will be both powerful and timely.

This is Carney’s last (scheduled) public speech before his departure.

It’s got a suitably grand title-- The Grand Unifying Theory (and practice) of Macroprudential Policy -- and tries to explain how central bankers can ensure the financial system supports the economy.

An important issue at this time in particular -- with Carney pointing out that financial crises occur roughly once a decade:

Financial crisis through the ages

Italy boosts stimulus programme

The Italian government has doubles its stimulus programme to protect its economy from the coronavirus.

Ministers have announced that the plan now totals €7.5bn, up from €3.6bn.

Prime minister Giuseppe Conte says the money will be available to help “families and businesses tackle this emergency which is not just a health one but also an economic one”.

The boost comes as Italy shuts all its schools for several weeks, as my colleague Lorenzo Tondo explains:

Italy has been grappling to contain Europe’s worst outbreak of coronavirus, which so far has claimed 107 lives.

On Thursday, Rome revealed that is evaluating the possibility of providing support to families, including reimbursements for babysitter costs and unpaid leaves of absence from work.

“We should not assume that people are home using up holiday pay or paid leave,” Elena Bonetti, minister of family affairs, told Radio Capital.

Flybe collapse is bad news for regions, and hen party

The flight departure boards showing cancelled flights at Glasgow Airport today.
The flight departure boards showing cancelled flights at Glasgow Airport today. Photograph: Lucinda Cameron/PA

The collapse of Flybe today will be felt the most severely in outlying regions, where domestic flights are crucial lifeline for those travelling for work, writes my colleague Jessica Murray.

Down in Cornwall, one 52-year-old who travels frequently to London and further afield for meetings, said losing the Flybe service would have a major impact.

With four Flybe flights a day to Heathrow, it was possible to get to London and back in a day.

“With the collapse of Flybe and no sign of a viable alternative I will have to start travelling the previous day and stay over in London.”

Meanwhile, David Eyes commutes to Edinburgh from Manchester every week, flying up on Monday morning and returning on Wednesday evening.

He has booked his flights with Flybe up until the end of March, and still has no guarantees about whether he will be refunded.

Eyes, a consultant in financial services, said:

“Flybe is central to commuters all over the country to get from region to region. I’m amazed the government hasn’t stepped in and done something. It will impact the country’s economy and people getting around.”

Holidaymakers have also been affected, with one unlucky hen party seeing their flights cancelled for a second time, after originally booking through Thomas Cook last year.

Hannah, 27, is organising a trip to Disneyland at the end of March for her friend’s hen do, and after having to deal with cancelled flights twice, the party of 10 have now spent nearly £2,000 on Eurostar tickets to get to Paris.

Hannah says:

“For two airlines we’re using to go into administration in the space of six months, it just feels like sod’s law.

Now the group are keeping their fingers crossed that the Disneyland resort remains open as the coronavirus continues to spread throughout Europe.

The logo of Walmart appears above a trading post on the floor of the New York Stock Exchange.

US hypermarket giant Walmart is restricting staff from travelling to conferences, trade shows and other events.

It is also restricting cross-border international travel to “business-critical trips” only (and they’ll require high-level approval), while domestic travel is only allowed if it’s essential.

Even group meetings are being cut back, Marketwatch reports, with Walmart telling staff:

“Let’s use video conferencing or call in rather than travel.”

Updated

European markets close lower

European stock markets have closed in the red, hit by coronavirus gloom.

ITV was the top faller in London, down 12% after warning that advertising revenue would fall 10% in April due to a plunge in travel adverts.

Cruise company Carnival and holiday firm TUI both tumbled 7.2%, with traders expecting much less demand for its services until Covid-19 is under control.

British Airway’s parent company, IAG, fell 5.3% after Flybe’s collapse showed the crisis facing airlines. IATA’s warning that a fifth of global revenues could be wiped out this year also drove its shares down.

Here’s the damage.

  • FTSE 100: down 110 points or 1.6% at 6705
  • German DAX: down 182 points or 1.5% at 11,944
  • French CAC: down 103 points or 1.9% at 5,361

This leave the EU-wide Stoxx 600 slightly up on the week, but still 11% less than two weeks ago.

The steady increases in cases in Europe, the UK (now 115) and the US are alarming investors, as David Madden of CMC Markets explains:

Health fears have ramped up again and traders are running for the hills. Even though governments along with international bodies have pledged huge sums of money to help combat the health crisis, dealers are still scared.

It is as if the more money is thrown at the problem, the more nervous dealers become - the intervention acts as an indication of weakness.

Fears over Flybe pensions

Getting back to Flybe’s collapse... there are concerns about the security of the airline staff’s pensions.

This is because the firm’s scheme, the British Regional Airlines Group (BRAG) pension scheme, is registered in the Isle of Man. That means it is not protected by the UK’s pension lifeboat, the Pension Protection Fund (PPF), following the airline’s collapse this morning (5 March).

A PPF spokesperson told Pensions Age:

“We understand this must be a worrying time for Flybe employees and pension scheme members.

“The Flybe pension scheme is based in the Isle of Man under the jurisdiction of their government, which is separate from the UK government, meaning the scheme is not protected by the PPF.”

According to Pensions Age, the scheme has liabilities of £170m across 1,350 members, with an overall deficit of £11.6m as of November 2018.

JCB: Chinese supply chain is recovering

The new generation excavator assembly line at JCB Heavy Products Limited in Uttoxeter, Staffordshire.

A ray of sunshine for British manufacturing amid coronavirus disruption: digger manufacturer JCB has ended short-time working at its UK factories, reverting back to a full working week.

JCB had cut back hours for about 4,000 employees in mid-February as it struggled to source parts. They moved to a 34-hour working week, banking the extra hours to be worked later while not having their pay cut.

However, those pressures had eased as the outbreak slowed in China, although the disease’s spread elsewhere could also affect it, JCB said.

Graeme Macdonald, JCB’s chief executive, said:

“This is not a moment for celebration, but it is a step in the right direction. There has been some improvement in the shipment of components from China but new threats are emerging from our supply chain in other parts of the world, notably Italy and South Korea.

“We will continue to monitor the situation very closely on a daily basis and take any necessary measures to protect the business.”

Wall Street’s tumble is quite a contrast with China, where the main stock index hit a two-year high today.

The CSI 300 jumped 2.2% today, meaning it has more than recovered its slump after the Lunar New Year. Traders are encouraged by signs that Chinese factories are getting back to work, and by falls in the number of new Covid-19 cases.

Beijing’s efforts to stimulate its economy through cheap loans for banks, tax cuts, and loan relief, are all helping too.

More and more companies are asking staff to work from home, or reining in their travel plans.

In the US, Amazon and Facebook are encouraging their employees in Seattle to stay home after workers for each company tested positive for Covid-19.

CNN explains:

Amazon revealed earlier this week that one of its Seattle-based employees has been diagnosed with the virus. On Wednesday, Facebook said a contractor who works at one of its offices in Seattle had tested positive.

Updated

The market turmoil has provided one benefit for Americans - mortgages rates are now their lowest ever.

Associated Press explains:

The average rate on a 30-year fixed mortgage has hit a record low of 3.29%, driven down by investors shifting money into the safety of U.S. Treasurys as the viral outbreak deepens.

Mortgage buyer Freddie Mac says the average rate on the benchmark 30-year loan this week tumbled from 3.45% last week. The new rate is the lowest level since Freddie Mac started tracking it in 1971, the company says.

Capital Economics have had a stab at estimating the impact of coronavirus on the US economy.

They freely admit it’s a “finger in the air” exercise, as we simply don’t know how far the virus will spread. And they’ve come up with two scenarios - one rather more alarming than the other.

Their current working assumption is still that the number of coronavirus cases in the US is restricted to the low tens of thousands (out of 325m people), and drops off by the summer. That would only knock 0.2% off US growth this year.

But....in a worse-case scenario that resembles past pandemics, up to one-third of the population could eventually become infected, with the disruption lasting for closer to 12 month.

And in that severe scenario, they estimate that GDP would fall by 3.0% over that year -- a painful downturn.

The resulting recession would prompt the Fed to cut interest rates to near-zero again and we would expect a major fiscal stimulus too.

Today’s selloff means the Dow Jones industrial average is 9% below its levels on 21 February, before the coronavirus selloff began.

It’s still up on the week, following surges on Monday and Wednesday. Those gains appeared to be driven by hopes of stimulus moves, and relief that Joe Biden did so well on Super Tuesday (he’s less of a threat to Wall Street than Bernie Sanders or Elizabeth Warren).

The Dow Jones industrial average
The Dow Jones industrial average over the last two turbulent weeks Photograph: Refinitiv

Shares in major cruise operators are also sliding:

Every member of the Dow is falling.

Financial stocks are being hit by the prospect of a fall in US growth, with American Express down 4%, JP Morgan losing 3.8% and Goldman down 3.1%.

Boeing has lost 3.45%, as a slump in airline revenues is going to hurt demand for new planes.

Consumer-focused companies are also being hit. Nike are down 3.1%; it would suffer from a drop in retail spending. Media company Walt Disney has lost 3.3%

Stocks fall 2% on Wall Street

Newsflash: Stocks are tumbling on Wall Street at the start of trading, as fears of a global recession sweep the markets again.

Another very nervy session has begun with a wave of sell-orders. This has driven the Dow Jones industrial average down by 709 points, or over 2.6%, to 26,381.

That’s wipes out two-thirds of yesterday’s rally, and sends New York stocks back towards the lows seen last week.

The S&P 500 is taking a buffeting too, down 71 points or 2.2% at 3,058.

Airline stocks are leading the selloff, following IATA’s grim warning that the coronavirus could knock $113bn of global revenues this year.

Airline shares, March 5th 2020
Airline shares are falling this morning Photograph: Bloomberg TV

Updated

Some Flybe customers should be able to recover the cost of cancelled flights -- but they’ll still be hit in the pocket.

My colleague Miles Brignall explains your rights:

Those who bought a tour package should get a full refund, or the offer to reschedule the trip to a later date.

However, many passengers will have been left holding expensive onwards flights, hotel, and other holiday bookings that they will not be able to cancel. In many cases they have lost their money.

Onward flights booked with a second airline, will likely go ahead, and as a result the second airline is under no obligation to refund you.

Passengers booked onto a flight that has been cancelled by the airline because it no longer wishes to operate the flight, are entitled to a full refund, but will struggle to recoup their “consequential” losses

Cinema operator Cineworld has also been hit by the coronavirus crisis.

Shares in Cineworld have slumped by 17% so far today, to a near seven-year low, as the Covid-19 virus threatens to keep people out of its seats.

The delay of the next James Bond film, from April to November, is clearly a major blow to Cineworld, as my colleague Benjamin Lee explains:

No Time to Die will now face competition from the Disney animation Raya and the Last Dragon, Godzilla vs Kong and King Richard, a drama starring Will Smith as the father of Venus and Serena Williams.

The move comes after fears that the coronavirus could impact the global box office by as much as $5bn. There have been cinema closures in Italy, South Korea, China and Japan.

A woman wearing a facemask amid fears of the spread of the COVID-19 novel coronavirus walks past a poster for the new James Bond movie “No Time to Die” in Bangkok.
A woman wearing a facemask amid fears of the spread of the COVID-19 novel coronavirus walks past a poster for the new James Bond movie “No Time to Die” in Bangkok. Photograph: Mladen Antonov/AFP via Getty Images

Updated

UK trains offer free travel to stranded Flybe staff and passengers

Just in. Britain’s train operators have agreed to provide free travel to Flybe staff and customers who are unable to travel over the next week (as the Caledonian Sleeper also pledged earlier).

Robert Nisbet, Director of Nations and Regions at the Rail Delivery Group, on behalf of train operators, says:

”We know how distressing the news about Flybe is for their staff and customers which is why train operators have arranged free travel to help them get to their destinations.”

Passengers stand by empty check-in desks at Birmingham International Airport today
Passengers stand by empty check-in desks at Birmingham International Airport today Photograph: Jacob King/PA

Opec proposes oil supply cuts as Covid-19 hits demand

A Red Cross medic measures the temperature of a participant of the 178th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria today
A Red Cross medic measures the temperature of a participant of the 178th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria today Photograph: Alex Halada/AFP via Getty Images

The threat of a global recession has forced the Organisation of Petroleum Exporting Countries to agree the deepest oil production cuts since the global financial crisis in 2008.

The oil cartel said Covid-19 could halve the world’s expected oil demand growth for the first half of this year.

In response it plans to deepen its existing production cuts of 2.1 million barrels of oil a day by another 1.5 million barrels, or 3.6% of global oil supplies, from next month.

Opec will take responsibility for cutting 1 million barrels of oil a day, and expects its allies in the Opec+ group, led by Russia, to cut the remaining 500,000 barrels from their combined oil production. Opec+ is expected to give its verdict on the plan tomorrow.

The proposed cuts are the deepest since Opec agreed to hold back around 4.2 million barrels of oil a day during the global financial crisis.

Jeff Currie, Goldman Sachs’ head of global commodities research, told Bloomberg that the plans might be too little too late to prop up oil prices

“I think the damage is done.

“Cutting production by 1.5m barrels a day in April or May is not going to not really going to save you in the current environment. That’s why I say it’s too little too late.”

Overnight rail service Caledonian Sleeper is rather decently offering free travel for the next week to Flybe customers stranded by its collapse.

They can secure a seat on either the Lowlander route (which runs from Glasgow and Edinburgh to London), or the Highlander (which links Aberdeen, Fort William, Inverness and London).

Ryan Flaherty, Serco’s Managing Director for Caledonian Sleeper, says:

“The news about Flybe entering administration is extremely sad and we’re aware that many passengers and crew will be struggling to get home.

It’s best to phone their Guest Service Centre [0330 060 0500], rather than just turning up at the station.

The Sleeper’s not as fast as flying -- although much better for the environment -- and the service has been hit by teething problems. The ‘hotel on wheels’ relaunch last April was something of a disaster, with delays, booking errors, a water leak, and problems serving food to customers. But on the upside, the Guardian’s Gwyn Topham was accidentally served three ‘delicious’ game pies....

HSBC has confirmed that an employee has tested positive for the coronavirus, and that around 100 colleagues from its research department have been sent home while the office is deep-cleaned.

A spokesperson says:

We have been informed that one of our employees at 8 Canada Square has been diagnosed with COVID-19. This colleague is under medical supervision and has self-isolated. We are working closely with the health authorities.

We are deep-cleaning the floor where our colleague worked and shared areas of the building. Colleagues on that floor, and others who came into contact with him, have been advised to work at home. Based on medical and official advice the building remains open and operates as normal.

Our first priority and concern is the health of our employees and customers – and we are encouraging our colleagues to monitor their health carefully and stay at home or call a doctor if they feel unwell.”

Updated

Sick pay issue looms....

Back at the British Chambers of Commerce annual meeting today, health secretary Matt Hancock said he was working with the Department for Work and Pensions on a way to extend sickness benefit to all workers.

That could including contract workers and the self employed, my colleague Phillip Inman reports.

Asked about the issue, Hancock said.

“It is vital that the same approach applies to all workers,”

But the situation was not an easy one to resolve and talks were ongoing he added.

Yesterday, prime minister Boris Johnson said sick pay would be paid from day one -- but that won’t benefit the self-employed, gig economy workers, or some on low pay.

Earlier, the CBI said the government should extend Statutory Sick Pay (SSP) to all workers (e.g. agency staff and others on flexible or zero-hours contracts) who self-isolate themselves in accordance with public health guidance.

Among its demands were:

  • Clarifying in law that being unable to work because you’re self-isolating to comply with public health guidance - even if you are otherwise healthy - entitles a worker to statutory sick pay

  • Clarifying that workers who are following public health advice on Coronavirus are entitled to SSP even if they don’t have a GP’s ‘fit note’

  • Removing the need to earn over £118 a week to qualify for SSP, which is unfair to part-time employees. The Government proposed this in a 2019 consultation - which the CBI supported - and these plans should now accelerate

  • Introducing emergency relief for business – especially small businesses – if the total cost of sick pay becomes unsustainable. Small businesses may be particularly susceptible to cash-flow problems meaning that prompt reimbursement will be key to their ability to continue supporting staff.

Updated

The Advertising Standards Authority has also also been clamping down on “alarmist” and “scaremongering” marketing for face masks, which could exploit people’s fears over the coronavirus outbreak.

Our science editor Ian Sample explained yesterday:

In rulings published on Wednesday, the regulator found that online ads from two companies breached its code and were misleading, irresponsible and “likely to cause fear without reasonable justification”.

One advertiser, Novads OU, based in Tallinn, Estonia, ran display ads and webpages for an Oxybreath Pro face mask, which highlighted the death toll from the coronavirus outbreak and referred to a “growing sense of panic” before touting the mask’s “unparallelled [sic] protection.”

Here’s an example of why the CMA are clamping down on coronavirus-related products:

Retailers warned against coronavirus rip-offs and price gouging

An empty shelf as hand sanitiser is sold out in a Boots store in central London yesterday
An empty shelf as hand sanitiser is sold out in a Boots store in central London yesterday Photograph: Yui Mok/PA

Just in: Britain’s competitions watchdog has warned retailers not to hike prices, or make misleading claims, to exploit customers during the coronavirus outbreak.

The Competition and Markets Authority says companies who charging excessive prices or making misleading claims about the efficacy of protective equipment may be breaking the law.

We will take “direct enforcement action” where necessary, the CMA adds menacingly, as it tries to prevent price-gouging, with many healthcare and cleaning products in short supply.

The CMA is also assessing whether it should advise Government to consider taking direct action to regulate prices.

CMA Chairman Lord Tyrie says anyone trying to rip off customers should stop:

“We will do whatever we can to act against rip-offs and misleading claims, using any or all of our tools; and where we can’t act, we’ll advise government on further steps they could take, if necessary.”

The warning also applies to online shopping -- including anyone offering, say, hand sanitisers or face masks on Amazon (where prices of some items have soared several hundred percent).

CMA Chief Executive Andrea Coscelli explains:

“We urge retailers to behave responsibly throughout the coronavirus outbreak and not to make misleading claims or charge vastly inflated prices.

We also remind members of the public that these obligations may apply to them too if they resell goods, for example on online marketplaces.”

Here’s our news story about HSBC’s Covid-19 infection:

Hancock: We want to protect businesses from Covid-19

Britain’s health minister Matt Hancock at the annual conference of the British Chambers of Commerce today
Britain’s health minister Matt Hancock at the annual conference of the British Chambers of Commerce today Photograph: Toby Melville/Reuters

Business leaders then quizzed Matt Hancock about the government’s plans to protect the economy from the coronavirus.

One pointed out that venues, such as Newmarket racecourse, will suffer -- how will restaurants, for example, recover lost business? After all....

There’s nothing so valueless as a ticket to yesterday’s race.

The health secretary replies that protecting the economy is a “very important consideration”, although the top priority is to keep people safe. There are a “range of options” to support businesses and supply chains if needed.

Hancock insists the government is following the advice from scientists,. The UK didn’t ban flights from China because the experts said it would not be effective.

The only country that ignored that advice was Italy, Hancock says pointedly.

So on large events, the current scientific advice is that there is no material, epidemiological benefit to cancelling events, as long as people obey the medical advice to wash hands, and catch a sneeze in a tissue.

And ultimately, Hancock adds:

We are a herd. You can’t get away from the fact that we as a community, as a country, and indeed globally, we are all we are affected by this virus because others are affected.

Updated

Hancock: coming weeks will be tough

UK health secretary Matt Hancock is speaking at the British Chambers of Commerce’s annual meeting in London now.

Hancock tells the assembled business people that the weeks ahead will be tough, as there is unlikely to be a vaccine available in the next few months.

He explains the government has been trying to contain Covid-19, by detecting people infected and tracking down those they have spent time with. But it may not be able to contain the virus forever, especially if cases continue to rise in Europe.

When that happens, Britain will move to the “delay” phase of its plans.

There are now 85 confirmed cases in the UK, so shutting down all the schools and universities would not bring clinical benefits but would have major social and economic costs, Hancock adds.

Across the country, readers are evaluating the impact Flybe’s collapse will have on regional travel, both for work or to visit family, my colleague Jessica Murray reports.

Mike Green, 29, was due to fly from Aberdeen with Flybe this morning and is now facing a six-and-a-half hour train journey back to Manchester.

Green, a manager at an oil and gas company, regularly travels with the airline to more remote areas of the UK including Aberdeen, Inverness, south Wales and Southampton where FlyBe is the leading carrier.

With the airline now gone, he doesn’t know if this will be able to continue.

Green says:

“To be honest, I think the situation is going to be either that the travel doesn’t happen, so we work out some other way around it, or there’s going to be an expectation of traveling at the weekend because I know my employer is going to be fuming that six-and-a-half hours of my day today is going to be spent on a train,”.

“I was supposed to fly into Manchester and go to a set of meetings, but that’s not going to happen now.”

He added the decentralised nature of the oil and gas industry means communication could be tricky without the reliability of Flybe’s service.

“There’s still a premium placed on face-to-face meetings as opposed to talking over the phone, so I spend a lot of time in airports and train stations.”

For Hayley Anderton, 46, in Leicester, Flybe’s collapse means she may no longer be able to visit elderly father who lives in Shetland, or her father-in-law in Inverness, as often.

She would fly from Birmingham up to Aberdeen or Inverness around four times a year to visit her relatives.

“I don’t like taking short-haul flights but on a limited income and without a car it’s been the only feasible option to get to northern Scotland,” Anderton said.

“Flybe has been a lifeline service for keeping the UK connected, they’ve been good to fly with, and I’m really going to miss them.”

She is now looking at trains which are three times the cost of the previous flights and take much longer - a train from Birmingham to Inverness takes eight or nine hours.

“It makes getting somewhere like Shetland from the Midlands a 24-hour journey. I guess it’s the same for a lot of regional airports around the UK that people who relied on those flights are going to struggle perhaps for work and definitely for seeing family.

Anderton added that she actually considered moving up to Inverness with her partner last year, but when Flybe first ran into trouble in January she reconsidered.

“One of the things that made it attractive was that it was reasonably well-connected with the rest of the UK by Flybe.”

The incident at HSBC comes as City firms prepare to let more staff work from home.

They already have contingency plans for an epidemic -- including splitting teams up so that everyone doesn’t catch the virus at the same time.

They’re also getting ready for an explosion in remote working, although the Financial Times reports that there are concerns:

While most banks have ample capacity for staff to access internal networks remotely, senior bank executives are concerned about broadband capacity at their employees’ homes, which is not as fast as at the banks and could be slowed down even further if their children are also off school watching streaming services such as Netflix.

HSBC evacuates some staff over coronavirus scare

Travel stockA Flybe plane takes off at London City Airport.

HSBC has evacuated a floor of its Canary Wharf office after an employee was feared to have caught coronavirus.

The bank has ordered a deep clean of the area, which houses its research department, a source said.

It has so far not affected HSBC’s trading floor, which carries out large transactions on financial markets for big institutions.The evacuation was first reported by Financial News.

Newsflash: Pioneering low-cost airline Southwest has just issued a warning about coronavirus.

Southwest, which basically created the budget airline model in the early 1970s, says customers demand has declined.

It fears the crisis will wipe $200m-$300m off its operating revenues this quarter.

Aviation minister Kelly Tolhurst also told MPs that the government “stands ready” to support the regional airports that will be hit by Flybe’s collapse.

“We recognise the impact that this will have on UK airports particularly those which have large-scale Flybe operations. Government stands ready to support this sector.”

“We are urgently working with industry to identify opportunities to fill routes.

Tolhurst does have one piece of good news - Scotland’s Loganair has committed to keep 16 Flybe routes running.

Updated

Government: Not our job to prop up failing Flybe

In parliament, transport minister Kelly Tolhurst is giving a statement on Flybe’s collapse.

She says the government has been working “tirelessly” with Flybe’s owners since January (when the firm nearly collapsed).

Ministers are reviewing Air Passenger Duty, to see how it can support the government’s ‘levelling up’ agenda, Tolhurst adds.

She explains that existing problems at Flybe have been compounded by the coronavirus outbreak, which had a “signifiant impact on demand’. As such, the directors decided it did not have a viable future.

Tolhurst explains:

Unfortunately, in a competitive market, companies do fail, and it is not the role of government to prop them up.

Tolhurst says there is sufficient capacity on other airlines to bring Flybe passengers home, and is pleased to see some airlines such as easyJet are offering rescue fares

Flybe passengers should not got to the airport, she continues - they should look at the Civil Aviation Authorities website instead.

And she expresses “sincere sympathy to those who have lost their jobs”, including cabin crew and ground staff. It is a worrying time for them and their families.

Finally, Tolhurst reveals she will hold a meeting with the airline industry to discuss coronavirus’s impact next week.

Coronavirus fears hit markets again

European stock markets have fallen sharply this morning, as fears of a global downturn rise again.

The FTSE 100 index has dropped by over 1.5%, wiping out Wednesday’s recovery, as shares continue to whip-saw around.

Investors appear to jumping between pessimism about a global recession, and optimism that policymakers will announce stimulus measures to avert it.

Yesterday the Dow Jones industrial average surged by 4.5%, or 1173 points, but pessimism now has the upper hand:

European stock markets, March 05 2020
European stock markets, March 05 2020 Photograph: Refinitiv

Financial data firm MSCI fear Wall Street could tumble by another 10% in the short term, warning:

  • The global spread of coronavirus is already affecting global growth. We’ve conducted a what-if scenario analysis that assumes a short-term drop in growth of 2 percentage points and a risk-premium increase of 2 percentage points.
  • Our model indicates that, in such a scenario, there’s room for further short-term losses: U.S. equities — already down 11% from Feb. 19 through March 3 — could drop a further 11%, while a hypothetical 60/40 global multi-asset-class portfolio could lose another 7%.

In other travel news, the British Chambers of Commerce has called on the government should press ahead with Heathrow expansion.

Speaking at the BCC’s annual conference in London, director general Adam Marshall said a third runway should be a broad agenda of infrastructure spending.

It must also pump more money into trade support “to give a leg up to the many thousands of companies whose overseas efforts will make global Britain a reality,” Marshall added.

Flybe passengers at Manchester rethink plans

At Manchester Airport, Flybe customers are also coming to terms with the airline’s collapse.

Patrick Greenford, 77, retired, from Leeds, tells my colleague Gregory Robinson:

I think it’s very sad that it’s gone bust and I feel very sorry for the people who were meant to be flying with them today. It’s very sad for the people who don’t have work anymore too.

Margaret Shepherd (75) and Stuart Shepherd (69) from Bradford, had been planning to fly to Knock, on the west coast of Ireland, for Margaret’s birthday. Now they’ll have to fly to Dublin and hire a car instead.

It’s really sad especially after Thomas Cook, they say, pointing out that there isn’t another airline which serves the UK’s regional airports.

Student Lauren Rose, 20, was flying home to Jersey - and says many people will miss Flybe.

I use their services to take me to and from Jersey. I’m used to flying from home to here in Manchester but I know there were a lot more locations they provided services which will probably affect so many people.

Practically everyone I know back home has used them at some point.

Niamh Kennedy, 66, a retired teacher from Manchester, adds:

I’ve never flown with FlyBe but my sister always used to. She always used to visit Knock in Ireland. I have no idea how she’ll get there now...

Updated

French contract worker Sebastien Cressent is also stranded at Birmingham Airport by Flybe’s collapse.

Cressent, who doesn’t speak English, works at a local car plant. He returned his hire car to fly back home to Paris for a few days off and discovered what had happened.

He’s been told the 2pm flight to Paris is full, so he might need to go to Manchester to get an evening flight to the French capital.

Flybe passenger Sebastien Cressent at Birmingham Airport
Flybe passenger Sebastien Cressent at Birmingham Airport Photograph: Joanna Partridge

UK government officials at Birmingham Airport, March 05 2020
UK government officials at Birmingham Airport this morning Photograph: Joanna Partridge

The 10 Flybe check-in desks at Birmingham airport are deserted, following the airline’s collapse in the early hours of this morning, my colleague Joanna Partridge reports.

Several people in hi-vis vests from the Civil Aviation Authority, a government surge response team and from the airport are on hand to help any passengers who have travelled to the airport, unaware of Flybe’s demise.

An airport spokesperson said as many as 30 passengers had arrived at the terminal during the morning, hoping to depart for a range of domestic destinations such as Belfast, Aberdeen, Isle of Man and Jersey, as well as continental Europe.

Departure screens in the terminal listing the cancelled flights inform Flybe passengers to “seek alternative arrangements”.

One of those disappointed was Carole Lewis, due to fly to Inverness to visit family. She’d taken an early train to the airport from her home in Shrewsbury and hadn’t heard the news.

Lewis tells us:

“I’ve never flown there before, I was quite looking forward to it,”.

She was hoping to be able to book a seat on a coach, but was expecting the journey to take a long time.

Flybe passenger Carole Lewis at Birmingham Airport
Flybe passenger Carole Lewis at Birmingham Airport Photograph: Joanna Partridge

An airport spokesperson said there have been “very positive discussions” with other airlines interested in taking on some of Flybe’s routes.

Michelle Fegan, outside Exeter Airport
Michelle Fegan, outside Exeter Airport today Photograph: Steven Morris

Back outside Exeter Airport, Michelle Fegan, who sells pasties, sandwiches and snacks says she is devastated by Flybe’s collapse.

“It’s a huge blow for Exeter. It’s going to affect the whole city and the region. I feel so sorry for the staff.”

Updated

IATA are urging governments to help airlines ‘stay afloat’ - an admission that others could follow Flybe into administration.

Alexandre de Juniac, Iata’s director general, says:

“The turn of events as a result of Covid-19 is almost without precedent. In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse.

“Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times.”

If IATA’s worst-case scenario comes to pass, then the airline industry is going to be in serious trouble.

Here’s some reaction:

Coronavirus crisis could cost airlines $113bn revenue this year

NEWSFLASH: The global coronavirus outbreak could be as severe a blow to the airline industry as the global financial crisis a decade ago.

That’s according to IATA, which represents the airline industry. In a new report, it warns that Covid-19 is set to cost the airline industry at least $63bn of lost revenue -- or $113bn if the virus spreads ‘extensively’ across more countries.

IATA had previously expected a $30bn hit -- but has dramatically raised its forecast as the crisis escalates.

Its worst-case scenario now shows a fifth of revenues being wiped out, with heavy losses in Asia, Europe and the US. That would be a severe blow to the airline sector.

In new analysis, IATA sees 2020 global revenue losses for the passenger business of between $63bn (in a scenario where COVID-19 is contained in current markets with over 100 cases as of 2 March) and $113bn (in a scenario with a broader spreading of COVID-19).

IATA says the situation has deteriorated fast in the last fortnight.

IATA’s previous analysis (issued on 20 February 2020) put lost revenues at $29.3 billion based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China. Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.

Financial markets have reacted strongly. Airline share prices have fallen nearly 25% since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to industry revenues much greater than our previous analysis.

IATA’s “limited” scenario is based on counties with more than 100 confirmed COVID-19 cases (as of Monday) experiencing a sharp downturn followed by a V-shaped recovery profile. This would wipe out $63bn of revenues this year.

IATA’s “extensive spread” scenario uses a similar methodology but to all markets that currently have 10 or more confirmed COVID-19 cases. The outcome is a 19% loss in worldwide passenger revenues, which equates to $113bn.

IATA’s scenario of how Covid-19 will hurt the airline industry

Updated

Goldman: Coronavirus will push UK close to recession

Investment bank Goldman Sachs has warned that the coronavirus will push the UK economy to the ‘brink of recession’.

In a new research note, Goldman say Britain faces “a substantial hit to growth in coming months.

The UK is highly exposed to global activity (which we expect to contract in Q1), tourism exports are significant and the virus is spreading steadily within the UK.

It now expects the UK economy will stagnate in January-March, and contract by 0.2% in April-June.

Goldman Sachs analyst note on the impact of Covid-19 on the UK

Deutsche Bank are also anxious -- they’ve halved their forecast for British economic growth this year to just 0.5% this morning.

Other travel companies are stepping in to help Flybe customers who have been stranded.

London North Eastern Railway (LNER) is offering free travel for stranded staff and customers on its East Coast line today.

EasyJet is offering to fly customers home free today and tomorrow, or for a small fee until the end of May:

Experts fear more firms will follow Flybe's collapse

A sign at Southampton Airport this morning
A sign at Southampton Airport this morning Photograph: Andrew Matthews/PA

John Cullen, business recovery partner at accountancy firm Menzies LLP, says the coronavirus outbreak made a bad situation worse at Flybe:

“It had been reported that Flybe only had sufficient financial resources to last until the end of this month, but the dip in seat sales due to the coronavirus has piled on additional pressure, forcing the company into insolvency with the loss of over 2,000 jobs.

“Last month it seemed that the loss-making airline might be successful in securing a state loan, due to its important role in facilitating regional connectivity. However, the terms of the loan could not be agreed.

“It is clear that this Government has no intention of being free and easy with taxpayers’ money. Its prospective loan to Flybe had always carried significant risk, but the coronavirus situation has made matters worse.”

Michael Mulligan, insolvency partner at law firm Shakespeare Martineau, fears more companies will follow:

“Flybe’s collapse is the fourth significant UK airline failure since 2017. Whilst the impact of the coronavirus outbreak on demand for air travel was only partly to blame for its collapse, it is clear that the industry is going to take a savage hit in the coming weeks and months. The end of the line for another troubled European operator, Alitalia, is rumoured.

“It is still early days, but the unprecedented impact of Coronavirus is already causing massive challenges to people, business and supply chains. The virus could be the tipping point for those businesses already facing financial difficulties or with tight margins.

James Goodall, Transport & Leisure analyst at Redburn, agrees:

“Flybe’s failure this morning will likely be the first of many in 2020. The company was already in financial strain before any impact from coronavirus. That being said, 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.

Labour MP Ben Bradshaw, whose constituency contains Exeter Airport, has blamed the government for not reforming Air Passenger Duty in time to help Flybe:

Flybe had hoped to persuade the government to halve APD (£26 per passenger) on domestic flights in next week’s budget. They’d been promised a review, but clearly this wasn’t enough...

The FT explains:

Flybe became increasingly concerned that any cuts to APD might not kick in until 2021, which would be too late.

These are the routes which will be lost now Flybe has collapsed:

Flybe's route map

Some of these places will have been hoping to benefit from the UK government’s “levelling up” agenda... so this is a blow to them too.

Updated

Other Flybe staff, such as pilot Sarah Nicol, are also coming to terms with the airline’s collapse:

The coronavirus crisis means it’s a really difficult time to be finding a new job -- several airlines are putting staff on leave. But her uncle, former Scotland rugby union player Andy Nicol, is doing his bit:

Katherine Densham, who had worked for Flybe for 13 years as cabin crew, heard in the early hours that the company had collapsed.

She was due to fly from Exeter to London City and came to the airport – in her uniform – to check what was happening.

She broke down in tears and said:

“I feel really sad. I’m not sure what I’m going to do now. I heard in the early hours of the morning. I thought we’d be saved. I’ve no idea what I’ll do next – try and find some work to pay the bills.”

Flybe cabin crew member Katherine Densham

Flybe passengers left in lurch at Exeter

A few passengers arrived at Exeter airport this morning, having not got the message not to turn up – or simply not knowing what else to do.

Among them was a man who was hoping to fly to Paris for a birthday party. Disappointed, he turned around and went home.

Three young women, Abbey Fletcher, Jessica Canha and Robyn Kent, who work for a recruitment company and have been training in Bristol, were trying to get home to Jersey.

Fletcher said:

“We heard last night that flights might be cancelled but we just got up at 4.30am and turned up anyway. We didn’t know what to do.”

They were among the fortunate ones. The airline Blue Islands has stepped in to put on a free flight to the Channel Islands this afternoon.

Canha tells us:

“We’ll wait for that and take a nap in the meantime,”

Only one other flight is expected into Exeter today – a plane that left for Lanzarote this morning and is due back this afternoon.

Unions: 1,400 jobs at risk in Flybe's supply chain

Flybe’s collapse could cost 1,400 jobs at companies which worked with the airline, as well as the 2,000+ staff directly employed, says the GMB union.

Nadine Houghton, GMB National Officer says in a statement:

“The collapse of Flybe is a tragedy for the company’s loyal workforce.

“A domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airports.

“The last thing regions crying out for investment need is to see infrastructure that maintains good jobs ripped away.

“We need the Government to urgently step in and save jobs wherever possible. The damage to already fragile local economies must be minimised.”

Newsflash: John Lewis’s staff are getting the smallest annual bonus since 1953, as the retailer reports a 23% slump in underlying profits for last year.

Its staff, or partners, will get just 2% of their basic pay -- down from 3% last year .

New chair Sharon White has warned that “these are the most challenging but exciting times in retail for a generation”... More here.

ITV is forecasting a slump of at least 10% in advertising revenues in April as companies in the travel sector pull spend in the wake of the spread of the coronavirus.

ITV’s acts as a bellwether for the wider UK TV ad market and its plummeting forecast paints a grim picture for other broadcasters.

The company is already feeling the impact of the spread of the virus, with total advertising revenue in the first quarter growing significantly slower than analysts forecast. ITV said total advertising revenue is set to grow 2% in the first quarter.

Analysts at Citi had expected growth of 3.3%, indicating a significant pull back by advertisers as the crisis has gathered pace.

Announcing its full year results on Thursday, ITV says:

“In March and April, we have seen an impact from travel advertising deferments relating to the coronavirus,

“Early indications suggest total advertising revenue will be down 10% in April.”

Saga suffers cancellations

Flybe certainly isn’t alone.

Saga, the insurance and travel company for the over-50s, said this morning that it had seen an increase in holiday cancellations and a sharp drop in bookings in the wake of the coronavirus outbreak.

Passenger bookings at its tour operations had been down 20% from a year earlier, but have slumped even more in recent weeks, it told shareholders.

There are a range of actions the group can take to mitigate against weaker trading in the travel business, such as the cost efficiency actions already underway.”

Flybe collapse is 'devastating' for Northern Ireland

Chief executive of Belfast Airport, Brian Ambrose, speaking to the media in front of the empty Flybe check-in desks this morning
Chief executive of Belfast Airport, Brian Ambrose, speaking to the media in front of the empty Flybe check-in desks this morning Photograph: David Young/PA

Flybe’s collapse is a blow to Northern Ireland’s economy -- at a time when Brexit uncertainty is also high.

Brian Ambrose, chief executive of Belfast City Airport, hopes that rival airlines will step in to replace Flybe’s services.

In a statement, he says:

The airline was a significant economic driver for the region, carrying 1.6 million passengers to and from Belfast in 2019.

“I am confident that these well-established routes, coupled with our city centre location and recent £15m investment in terminal facilities, will prove an attractive option to airlines.

“Negotiations with a number of carriers are already underway.

Colin Neill, chief executive of Hospitality Ulster, describes Flybe’s demise as “simply devastating news for Northern Ireland”, adding it will hurt its tourism sector.

“The regional connectivity that Flybe offered was vitally important to tourism and our wider hospitality sector here, without it there will be a huge impact on visitor access.

“The knock-on effect of fewer visitors and tourists means that this sounds alarm for our pubs, restaurants and hotels at a time when coronavirus is compounding the sector’s problems.

The scene at Exeter Airport, Flybe’s base, is bleak this morning:

We reported yesterday that London City Airport (one of Flybe’s destinations) was worryingly quiet, as the coronavirus scared customers away.

My colleague Joanna Partridge spotted that there were as many (or as few) check-in staff as passengers:

“The plane was half-empty,” said Andrew Ross, who works in construction in the Netherlands and flies from Amsterdam to London a few times each year. “I wouldn’t have expected it – it’s usually busier. But it was nice and quiet.”

Just landed from Frankfurt, Kim Vaughan said there were fewer than 30 passengers on her flight. “It was a bigger plane, and it was almost completely empty,” Vaughan said. Jilles Visser, a Dutch electrician on a work trip from Rotterdam, thought his BA-operated flight was “very empty”.

Other airlines are suffering from the same problems as Flybe, points out our transport correspondent Gwyn Topham:

For now, the effects of Covid-19 on airlines echo the pattern among the human population: standstill in China, tolerated by the stronger carriers abroad, but potentially fatal to those less robust. And Flybe’s pre-existing conditions included an unusually onerous tax burden of air passenger duty affecting domestic flights, dampened demand alongside Brexit, and increased fuel and leasing costs from a falling pound. Its investors – a consortium led by Virgin Atlantic swooped in last year – had sensed a final opportunity after its share price had tanked; but by January they were begging the government, in vain, for assistance to stay alive.

But other airlines – including Virgin itself – are more directly exposed than Flybe to the crisis, first cancelling major Chinese routes and then seeing the drop in demand “rippling through” the global networks, as the International Air Transport Association (Iata) warned this week. On Wednesday, Virgin announced emergency measures, including cutting executive pay, and urging other staff to take unpaid leave, after bookings halved in recent days. Ryanair and EasyJet have cancelled hundreds of flights to Italy, and other destinations, while IAG and BA have even cut transatlantic services.

No airline, it appears, is immune – underlined by the sight of US airline executives meeting Donald Trump this week to discuss the impact in a country where domestic aviation is far bigger than international travel

Associated Press points out that Brexit has also been a factor:

Flybe has struggled with a series of issues, including the weakening of the pound in light of Britain’s pending departure from the European Union. The weaker pound hurts airlines like Flybe that have significant costs in dollars but take in revenue in pounds.

The airline also was struggling to pay its airline passenger duty, a tax on flights that many airline groups have long complained restricts growth.

There are two ways in which coronavirus scuppered Flybe’s prospects.

1) Scores of UK companies have been telling staff to work from home, or to cancel non-essential meetings. That undermines demand for Flybe’s routes to business centres such as London, Manchester, Paris, Hannover or Geneva.

2) Rising anxiety about catching Covid-19 is hurting holiday traffic. Flybe offered flights to Milan and Verona, for example -- but demand has slumped as Italy closes its schools for two months and bans crowds from football matches.

Government: Coronavirus has dragged a weak company down

Transport secretary Grant Shapps
Transport secretary Grant Shapps Photograph: Sky News

Transport secretary Grant Shapps has said the government tried its best to save Flybe, but the impact of Covid-19 on its business was too great:

“We really tried to do everything we could back at the turn of the year but unfortunately though, with the situation that’s developed with coronavirus, an already weak company just hasn’t been able to survive.”

Administrators: Virus, fuel costs, weak sterling and economic uncertainty all factors.

Alan Hudson of accountancy firm EY, who took control of Flybe overnight, says coronavirus put “added pressures” on the airline.

But he also points to the other problems which dragged Flybe down -- including currency volatility (a weak pound pushes up fuel costs), and general economic uncertainty:

“Despite an agreement with the Government to provide assistance to the Company, added pressures on the travel industry in the last few weeks have further deepened the severity of its financial situation.

“Flybe had already been impacted by rising fuel costs, currency volatility, and market uncertainty.”

The British Airline Pilots’ Association (Balpa) blamed Flybe’s owners and the government- not coronavirus - for Flybe’s failure.

Flybe was owned by Connect Airways – a consortium of Virgin Atlantic, Stobart Air and hedge fund Cyrus Capital.

General secretary Brian Strutton blasted them, saying:

“A year ago Flybe was taken over by new owners with promises of funding for a bright future.

“Six weeks ago, when the ownership consortium lost confidence, the government promised a rescue package, apparently at that time recognising the value of Flybe to the regional economy of the UK.

“Throughout, pilots, cabin crew and ground staff have done their jobs brilliantly, while behind the scenes the owners and, sadly, government connived to walk away. Flybe staff will feel disgusted at this betrayal and these broken promises.”

Passengers booked with Flybe are being urged not to go to the airport this morning:

Introduction: Flybe fails

A aircraft operated by the airline Flybe at Exeter Airport.
A aircraft operated by the airline Flybe at Exeter Airport. Photograph: Matt Cardy/Getty Images

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Flybe, Europe’s largest regional airline, has collapsed into administration this morning as the economic damage caused by the ongoing coronavirus crisis escalated.

The airline ceased trading in the early hours, as administrators took control of the Exeter-based group -- which operated services to regional airports across the country.

Last-ditch crisis talks failed to secure a rescue package, in a devastating hit to the company’s 2,000 staff. It’s also a real blow to the passengers who relied on the company’s services -- leaving some stranded today -- and a stark illustration of the consequences of the Covid-19 outbreak.

One source at the airline told the PA news agency that a drop in demand caused by the coronavirus “made a difficult situation worse” for Flybe.

Flybe was already in trouble, of course. Back in January, it came extremely close to collapse before a rescue deal was announced. But it wasn’t able to secure a £100m government loan, forcing its demise.

Flybe CEO Mark Anderson has told staff that the coronavirus has put additional pressure on the company, as it slipped over the brink into administration overnight:

“It’s with enormous sadness and a deep feeling of sorrow that I share the upsetting news that Flybe is shortly being put into Administration. Despite every effort, we now have no alternative – having failed to find a feasible solution to allow us to keep trading....

Anderson said Flybe’s management tried to secure support from the government and key suppliers, but without success, adding:

The coronavirus has impacted both our shareholders and ourselves and has put additional pressure on an already difficult situation. I am very sorry that we have not been able to secure the funding needed to continue to deliver our turnaround plan.

When an airline starts cancelling or delaying flights for more than three hours, passengers are entitled to compensation of €250-€600 (£230-£550) under European Union (EU) rules.

These rules apply if your flight left from the UK, the EU, Iceland, Norway or Switzerland, or  was with a European airline and landed in the UK, the EU, Norway or Switzerland, no matter where you were flying from.

The cause of the problem has to be under the airline’s control and not an ‘extraordinary circumstance’. Lack of planes/staff, flight overbooking, a strike by airline staff or an IT failure are all considered to be within the airline’s control – so compensation is payable.

Passengers on cancelled short-haul flights – up to 1,500km – are entitled to €250 or £230. For flights of 1,500km-3,500km, passengers are entitled to €400, and €600 for the longest flights (more than 3,500km).

Compensation is also payable if the plane is delayed. The payments are the same but only kick in when the plane has been delayed three hours for short flights or four hours for the longer trips. The delay is calculated against the time the plane was due to arrive.

Passengers are also entitled to ‘assistance’ under the EU rules. Short-haul passengers should receive food and water after two hours. Mid-distance passengers get help after three hours, while long-haul passengers receive it after they have been held in the terminal for four hours. If the delay is overnight, passengers should be provided with hotel accommodation but this often does not happen. This assistance should be provided irrespective of whether the delay is the airline’s fault.

The airlines have fought these compensation rules since they were introduced and passengers have had to go to court to get their money. The airlines frequently blame delays on events outside their control. Freak weather events or a last-minute strike by air traffic controllers are deemed to be outside their control. A lack of planes or staff is not.

What will happen to the scheme for UK travellers after Brexit is not yet clear. 

Miles Brignall

Flybe’s collapse will send a shiver through the travel sector. Passenger numbers are down sharply on some routes, particularly to Italy where over 100 people have died of the coronavirus.

We’ll be tracking reaction to Flybe’s collapse, and other economic consequences of the coronavirus, through the day.

The agenda

  • 9am GMT: UK new car registration for February

  • 1.30pm GMT: US weekly jobless figures

Updated

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