Carlisle-headquartered Stobart Group is set to lose its £50 million investment in Connect Airways following the dramatic collapse of Flybe.

In a statement issued to the London Stock Exchange after Flybe slumped into administration, the company confirmed it has written down its initial investment of £43.3m and a further £7m pumped into the struggling airline at the start of the year to £0.

Connect Airways – which also includes Virgin Atlantic and Cyrus Capital – completed its takeover of Flybe last year and has ploughed around £135m to keep it in the air.

But it put the loss-making carrier into administration on Thursday morning after crisis talks with the Government, which had included a potential £100m emergency loan, broke down.

Flybe – which narrowly avoided going bust in January, prompting the call for Government help – said a slump in bookings since the outbreak of the coronavirus had proved to be the final blow.

Now the three Connect Airways partners have been left to count the cost of Flybe’s demise.

It remains what, if any, of their investment will be salvaged, with administrators EY focusing its efforts on supporting its 2,400 employees and working with the Civil Aviation Authority to help and advise the airline’s customers after all flights were halted.

EY was unavailable for comment at the time of writing.

Stobart Group said the consortium was “deeply disappointed” to put Flybe into administration and cease trading, expressing “immense gratitude” to its employees for “their commitment and energy over the past 12 months”.

On its investment in Connect Airways, the company explained: “Stobart Group's initial investment was made up through the sale of Stobart Air and its aircraft leasing business, Propius.

“As a result, the non-cash balance sheet impact on Stobart Group is £43.3m and the additional £7m investment made in 2020.

“The value of both these investments will now be written down to £nil on its balance sheet.

“The Group has also foregone deferred interest that it would have benefitted from in future periods. Stobart Group had not expected to receive a contribution from Connect Airways until after FY 2020.”

The company said Exeter-headquartered Flybe – Europe's largest regional airline – had shown “promising signs of a turnaround”.

“Despite the best efforts of all, not least the Flybe people, the impact of COVID-19 on Flybe's trading means that the consortium can no longer commit to continued financial support,” it added.

Stobart Group stressed that Flybe’s administration would not have a direct impact on Stobart Air’s ability to trade.

Stobart Air's Employee Benefit Trust controls 60 per cent of the company, with Connect Airways the remaining 40 per cent.

While Carlisle Lake District Airport is unaffected, Stobart Group warned there would be a short-term impact on London Southend Airport, with Flybe just weeks away from launching ten routes from the airport.

However, it added the “long-term prospects of that airport remain compelling”.

Unions and politicians have reacted angrily to Flybe’s collapse, accusing the Government of failing to learn the lessons from the demise of Thomas Cook and Monarch.

Transport Secretary Grant Shapps said the Government “really tried to do everything we could back at the turn of the year”.

“Unfortunately, with the situation that has developed with [coronavirus], an already weak company, I'm afraid, just hasn't been able to survive,” he added.

Damian Waters, regional director for the North West at business organisation the CBI, said addressing the concerns of Flybe employees and passengers should be the top priority.

He added: “Government must protect those who’ve lost their jobs and secure vital regional connectivity. Better transport links are essential for firms in the North West and fundamental to the Government’s ambitions of ‘levelling up’ the UK’s economic performance.”