Flybe, the regional airline which collapsed into administration last month, is to be wound down after attempts to find a rescuer for the business were abandoned.

Sky News has learnt that Interpath Advisory, the insolvency practitioner, has terminated talks with potential buyers, which were reported to have included Air France-KLM and the German carrier Lufthansa.

Flybe’s 45 remaining employees were being informed of the decision on Wednesday.

Sources close to the process said ‘use it or lose it’ rules relating to take-off and landing slots had been a contributing factor in making a sale of the business too difficult to execute.

Flybe relaunched less than a year ago after being bought out of administration by Cyrus Capital, a little-known investor with limited experience of owning aviation businesses.

The company, which was listed on the London Stock Exchange until 2019, when it was sold to a Virgin Atlantic Airways-backed venture, was once among Europe’s biggest regional airlines.

Headquartered in Exeter, Flybe connected passengers flying from and between underserved UK destinations in the south-west, Midlands and Scotland.

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Its first collapse into insolvency took place as the pandemic took hold early in 2020.

Flybe had been operating flights to and from airports including Heathrow and Amsterdam’s Schiphol until its latest brush with administration.

Last month’s collapse affected thousands of passengers, although under Cyrus Capital’s ownership, Flybe was a far smaller business than it had been in 2020.

More than 200 employees were made redundant within hours of Interpath’s appointment.

One insider said a sale had also partly been stymied by complexities relating to European authorities’ attitude to a temporary operating licence for Flybe that would have been issued by the UK’s Civil Aviation Authority.

The company is now expected to be wound down, which will involve discussions between Interpath and aircraft lessors.

A spokesperson for the administrators confirmed to Sky News that “discussions with parties regarding a sale of the business has concluded and that a statement will be made in due course”.

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