Macquarie, Ferrovial left searching for traffic after UK airline collapse

Flybe, whose fate was sealed in part due to the effects of coronavirus, carried about 90% of traffic at Southampton Airport, part-owned by MEIF 4.

Macquarie Infrastructure and Real Assets and Spanish developer Ferrovial are seeking to replace about 90 percent of traffic at Southampton Airport in the UK following the collapse of airline Flybe.

The airline had been in financial difficulties for several months and despite intense talks, a £100 million ($123 million; €114 million) bailout offer from the UK government never came to fruition. Its fate has been sealed following recent knock-on effects from the coronavirus crisis and on Thursday called in administrators.

Flybe was a key regional operator and dominated routes out of Southampton Airport, accounting for about 90 percent of the traffic at the hub.

Southampton Airport, alongside Glasgow and Aberdeen Airports, is owned by AGS, a joint venture between Macquarie’s fourth European infrastructure fund MEIF 4 and Ferrovial, since October 2014.

Flybe operated 19 routes from Southampton, with five being backfilled by Loganair and Eastern Airways. It operated five routes each from Glasgow and Aberdeen, with both Scottish sites filling four out of the five, a spokesman for AGS said.

“The loss of Flybe is a devastating blow for the airline’s employees and the tens of thousands of passengers who relied on its routes,” the spokesman said in a statement. “It unfortunately brings into stark focus the fragility of the UK’s domestic connectivity. We are already speaking to other airlines about backfilling the routes operated by Flybe for which there is clear demand.”

Flybe’s collapse is the latest UK airport stumbling block for Ferrovial, which as the largest shareholder of Heathrow Airport in London suffered a blow last week after a Court of Appeal rejected current plans for a third runway at the UK’s largest hub. The court found the government’s policy statement on the third runway contravened its commitment to the Paris Agreement.

Macquarie last year increased its UK airport exposure, acquiring Farnborough Airport, a dedicated business travel airport in the south of England through MEIF 6, for an undisclosed amount.