Flybe pension fund members not covered after collapse

News


10 Mar, 2020

Flybe pension fund members not covered after collapse

After going into administration, Flybe pension fund members grew concerned when told about a hole of up to £80 million that is not covered by the government due to its location at the Isle of Man. 

In December 2018, the British Regional Airlines Group pension scheme had assets of £138 million but liabilities of £217.7 million. This was noted by the Group’s trustees. 

Last week, British regional airline Flybe collapsed after travel demand plummeted, making the aircraft carrier the industry’s first significant loss due to the coronavirus outbreak.

The Pension Protection Fund (PPF) generally covers 90% of the employees’ pension schemes and 100% for those retired, if the company goes into administration.

Flybe workers, however, noted that there is no government safety net and continued to say, “the lack of PPF coverage has been regularly communicated to members (most recently on 10 February 2020)”.

Flybe, which was regarded as the largest independent regional airline in Europe, transported roughly 8 million passengers in a year between 81 airports, and was owned by an association made up of Virgin Atlantic, Stobart Group and Cyrus Capital. 

At the end of 2018, the British regional airline started to make contributions to its pension plans, after noticing a significant shortfall. Every contribution amounted to £250,000.

“The trustee and Flybe put in place a 12-year recovery plan that was intended to complete 1 December 2030. So far, in accordance with the recovery plan agreed with the trustee, Flybe has paid into the scheme 12 monthly payments of £250,000 and a separate payment of £830,000 on 28 June 2019,” the trustees of the scheme said.

“However, in light of its administration, it is anticipated that Flybe will not be in a position to meet the next monthly payment of £250,000 due at the end of March 2019.”

After talking to Connect Airways consortium, the trustees said, “The trustee and its advisers are engaging with Connect to determine whether Connect will be in a position to honour its obligations under a guarantee that the trustee negotiated with Connect in respect of Flybe’s funding commitments under the recovery plan.”