Hedge fund spins after Flybe fails

Entities linked to Lucien Farrell’s Cyrus Capital hedge-fund have seen a net loss of as much as £70 million due to Flybe’s collapse.

After struggling to restart its operations due to delays in aircraft deliveries, the regional airline went into administration again in January.

Cyrus Capital saved it from its initial insolvency after a turnaround plan led by Virgin Atlantic failed in March 2020. Flybe was transferred to a new operating company in April 2021. It received an equity injection of £20million and credit lines totaling an initial £25million.

After increasing their support for it, the owners now owe approximately £50 million. Administrators will not be in a position to repay the entire debt.

It was Britain’s largest regional carrier, employing over 2,300 people. It served 143 destinations in eight European and UK countries. It was much smaller when it attempted to relaunch it in April 2021. It had 279 employees and operated only 17 flights to British and Continental markets.

Farrell, 48, was a key figure in the creation of Cyrus Capital, which now manages approximately $4 billion. Ben Elliot of the Conservative Party is his contact.

Cyrus Capital and the businessman have kept a low profile during their Flybe ownership. It took almost a year for the company to start operating flights properly after it was transferred to new owners. This was because it waited for aircraft from lessors. It reopened trading in March 2013, but it was sold six months later, after having been losing as much as £5 million per month.

Interpath, the restructuring expert, was hired to manage the airline’s second bankruptcy on January 28. The airline had hoped would bring value to Flybe’s Heathrow slots and find a buyer but was unable to secure a deal.

Administrators have determined that Cyrus’s Luxembourg-linked entity owes approximately £49 million. They won’t be able fully satisfy the Flybe debts from the sale of Flybe assets. Cyrus Capital didn’t respond to our request for comment.