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Flyglobespan flight operations ceased; 26th carrier to fail this year - CAPA

  • Flyglobespan flight operations ceased;
  • Suffering “liquidity issues”;
  • Last-ditch funding attempt fails;
  • From profitability and optimism to closure in less than a year;
  • IATA terminates 30 airlines in 2009 of which 14 have “disappeared”, but only smaller airlines failing.

The Globespan Group and Alba Ground Handling Ltd were placed into administration on 16-Dec-2009, with flight operations ceased as aircraft were grounded on the evening of 16-Dec-2009.

The company added that it is likely that other Group companies, including Flyglobespan, will be placed into administration on 17 -Dec-2009, with the UK Civil Aviation Authority revoking the airline’s licence.

Suffering “liquidity issues”

PricewaterhouseCoopers (PwC) has been appointed as administrators to the Scottish travel firm, which entered into administration having “suffered liquidity issues”.

Announcing the cessation, PricewaterhouseCoopers’ Joint Administrator, Bruce Cartwright, “despite difficult trading conditions, the company has successfully implemented a number of steps to refine operations and focus on core profitable business. Unfortunately a lack of confidence in the sector following the demise of other airlines resulted in a reduction of liquidity to fund the ongoing operations. The directors have sought to overcome this lack of liquidity by seeking additional funding from a third party in recent weeks but this has ultimately been unsuccessful. The Directors have therefore concluded with regret that the business can no longer continue to operate".

Flyglobespan announcement on website: Dec-2009

Further Xmas chaos for passengers in the UK

The Group is in contact with approximately 5,000 passengers who are expecting to travel to and from foreign destinations during the coming few days. 

UK Civil Aviation Authority (CAA) has also stepped in to protect customers on package holidays, with customers who booked package holidays with Globespan likely to be protected by ATOL.  However, airlines are not included in the ATOL arrangement, so passenger that booked directly with the airline will have to make alternative arrangements themselves.

Flyglobespan stated Thomas Cook, Lufthansa, easyJet, Thomson, Ryanair and Air France would be able to assist passengers, due to overlapping network coverage with the bankrupt carrier.  easyJet and Ryanair have already offered affected passengers special rescue fares where their routes overlap with those of Flyglobespan.

The carrier’s largest market, outside the UK (44.5% capacity share) was Spain (25.7% capacity share), followed by Egypt (16.4%), with the carrier’s highest frequency sectors being Glasgow-Tenerife, Sharm El Sheikh-Hurghada and Alicante-Edinburgh.

The carrier was, however, a small carrier in the European market, with slightly under 14,000 weekly seats at the time of closure.

Flyglobespan capacity share (seats) by market: Dec-2009 (prior to cessation)

Last-ditch funding attempt fails

Only a few days ago, Flyglobespan denied reports that it was on the "cusp of collapse", with Founder and Chairman, Tom Dalrymple, stating the company was on the verge of concluding a major funding deal with Halcyon Investments (the investment vehicle controlled by E-Clear).

The Edinburgh-based carrier did not disclose the size of the now-failed deal, but stated the cash would have allowed the firm to "prosper and grow".  The carrier added that it selected Halcyon Investments to provide financial backing after months of negotiations from a number of parties.

From profitability and optimism to closure in less than a year

Flyglobespan was established in 1970 and provided services and package vacations from Scotland's major cities of Glasgow, Edinburgh and Aberdeen to approximately a dozen destinations across Britain (including Manchester, Gatwick and Belfast) and Europe, as well as Orlando, Florida, and the Egyptian resort city of Sharm El Sheikh. Most of the Edinburgh-based company's 800 employees will lose their jobs, with a small number to be retained to help wrap up the company.

Flyglobespan key facts

Key Facts



Seven operational aircraft (including B737NG and B767 equipment), with a further two B787 aircraft on order (for delivery in Jul-2012 and Sep-2012)

Financial results

In Apr-2009, the carrier stated it expected to achieve its targets of equaling or beating 2008 traffic results in 2009. The carrier reported a net profit of GBP1.3 million for the 12 months ended 31-Oct-2009, with a light decline in turnover to GBP255 million in 2008/09, compared to GBP279 million in 2007/08, as a result of decreasing its fleet size. The carrier, at this time, added that it did believe the global economic downturn would have an impact on its expenditure for the remainder of the year, with rising fuel costs expected to offset any gains in the value the GBP.


1.5 million passengers in 2008. 4,500 passengers are currently abroad, with more than 100,000 travel plans being booked


12,000 services p/a


Edinburgh (ninth largest operator from Edinburgh Airport, with a 1.9% capacity share and 1,904 weekly seats)


Approximately 800

IATA terminates 30 airlines in 2009 of which 14 have “disappeared”, but only smaller airlines failing

IATA Director General and CEO, Giovanni Bisignani, in remarks at the Global Media Day on 15-Dec-2009, stated that the association has had to terminate 30 airlines “because they could not pay their bills” in 2009, of which 14 have “disappeared”.

For the time being, it is mostly smaller, lower capitalised airlines which have failed, with Mr Bisignani adding, “I don’t see the threat of major bankruptcies, but smaller airlines have difficulty accessing credit. As a result, they are fragile”.

This echoes similar concerns raised by European Regions Airline Association Director General, Mike Ambrose, earlier this year, who warned that without additional cash, several smaller European airlines would go bankrupt in what he called the worst conditions for the industry since "day one of World War Two".  

The following listing has been prepared from a variety of sources, covering over 70 bankruptcies in the past two years, including 46 in 2008 and 26 so far in 2009, according to the CAPA list. It may not be comprehensive, but it does illustrate the growing trend.

Accordingly, Europe has seen the largest number of bankruptcies in the past 21 months, with approximately nine so far in 2009 (including Flyglobespan) and 22 in 2008, with Asia Pacific seeing the collapse of approximately 11 airlines in 2009, after 12 in 2008. The Americas, meanwhile, has seen approximately 15 bankrupt airlines (three in 2009 and 12 in 2008), with eight African airlines ceasing operations in the 21 month period (threein 2009 and five in 2008).

Known worldwide airline failures/cessations: 2009





Flyglobespan (Scotland)



  • Financial challenges;
  • Liquidity shortfall.

Indochina Airlines (Vietnam)



  • Financial challenges;
  • The carrier has, however, requested the Civil Aviation Administration of Vietnam for approval to resume services on 25-Dec-2009. If the carrier is unable to resume services by 01-Jan-2010, its licence will be revoked.

PB Air (Thailand)



  • Financial challenges
  • Initially suspension, with the decision becoming permanent in Dec-2009

Bellview Airlines (Nigeria)

Scheduled and Charter


KDAvia (Russia)



  • Rosaviatsiya revoked certification;
  • High debt levels - accounts payable had exceeded RUB10 billion (EUR221 million).

SkyEurope (Slovakia)



  • Bridge financing facility fell through;
  • Liquidity shortfall;
  • Recent action of suppliers;
  • Reduced passenger bookings and traffic revenue;
  • Global economic crisis.

East Star Airlines (China)



  • Declared officially bankrupt, after a restructuring application was rejected by the Intermediate People's Court in Wuhan;
  • Grounded in 15-Mar-2009;
  • Debt levels surpassing USD110 million.

Silver Air (UAE)



  • Suspended operations due to restructuring.

MyAir (Italy)



  • Grounded by Italy's Civil Aviation Authority, ENAC;
  • Unreliable service, reflecting the carrier’s financial situation;
  • Failed to comply with obligations regarding the payment of taxes, duty and charges.  

Jet America (USA)

LCC and charter


  • Unable to finalise slots at Newark;
  • Unviable business model.

Aviacsa (Mexico)



  • Operations suspended by Mexican Government;
  • Non-payment of debt of approximately USD22 million related to the usage of air space;
  • The carrier has had two previous temporary groundings recently, due to irregularities with its fleet.

KrasAir  (Krasnoyarsk Airlines (Russia)



  • Officially declared bankruptcy after losing appeal in a case filed on 22-Aug-08;
  • High debt levels.

Qiantang Airlines (China)



OzJet (Australia)

Scheduled and charter


  • Inability to add cargo aircraft to CASA AOC;
  • Funds owed from one of its primary customers, IndoJet;
  • Perth Airport requested the carrier to cease operations at the airport as it was a “very significant continuing credit risk”
  • Has since, in Jun-2009, been purchased by the Strategic Group

Megantara Air (Indonesia)



  • Financial challenges.

Air Fiji (Fiji)



  • Financial difficulties;
  • Follows previous suspensions.

Linus Airways (Lintasan Nusantara) (Indonesia)



  • Financial difficulties;
  • Banned by the EU due to safety concerns.

Centralwings (Poland)

Charter and previously LCC


  • Follows 26-Mar-09 decision by LOT Board;
  • Unprofitable.

Kayala Airline (Saudi Arabia)

All-business class carrier


  • High costs;
  • Poor demand;
  • Declared bankruptcy.

Blue Wings (Germany)



  • Germany’s Federal Aviation Agency (LBA) revoked its operational approval, forcing the carrier to suspend operations;
  • LBA stated the company did not have enough assets to ensure its long-term viability.

Cameroon Airlines (Cameroon)

National airline


  • Cameroon high court charged the former administrator of Cameroon Airlines with embezzling almost USDD250 million.

SkyAirWorld (Australia)



  • Deteriorating economic conditions

MacAir (Australia)



  • Placed itself into voluntary administration on 29-Jan-09, before being placed into receivership by its bankers Suncorp Metway on 30-Jan-09;
  • Funding shortage;
  • “Systemic issues” according to the Queensland Government.

Caribair (Dominican Republic)

Scheduled and Chartered


  • Dominican Civil Aviation Institute (IDAC) has ordered Caribair to suspend operations for one year, due to alleged "operational irregularities" . The carrier was reportedly “concealing multiple commercial operations as private services aircraft not authorised for that purpose." Caribair plans to appeal the decision.

flyLAL (Lithuanian)

National carrier


  • Unable to secure the continuity of its operations and satisfy the demands of its creditors;
  • Terminated a preliminary agreement with SCH Swiss Capital Holdings after it failed to fulfil its obligations under the agreement on the sale of 100% of flyLAL shares;
  • High levels of debt;
  • Difficult market conditions;
  • Record-high oil prices;
  • Low travel demand over the European Winter

Zambian Airways (Zambia)

Privately owned


  • High fuel prices;
  • Economic conditions.

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