The coronavirus is officially claiming its first corporate casualties

March 5, 2020, 9:53 AM UTC

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.

The people most at risk from the coronavirus outbreak are those with underlying conditions—and the same may hold true for companies.

On Thursday, the beleaguered British airline Flybe went bankrupt, with all its flights being grounded and passengers being warned not to even try going to the airport unless they have flights lined up with another airline.

A major player in travel within the U.K. and to nearby European cities, Flybe had a tumultuous decade after its 2010 IPO. Hemorrhaging money in an extremely competitive market, it was bought and bailed out a year ago by a consortium called Connect Airways, comprising Virgin Atlantic, Stobart Aviation and Cyrus Capital Partners.

However, Flybe’s ongoing losses led it to ask the British government for what was effectively a rescue loan (and technically a deferment of a massive tax bill) at the start of this year. Much to the outrage of Flybe’s rivals, the government agreed—but then it failed to follow through. According to the Independent, the end was triggered this week by a fuel supplier cutting off Flybe’s credit, which then led airports to start impounding its planes.

Flybe may have been in irredeemable financial difficulties anyway, but it was the coronavirus outbreak that ultimately killed it. That much was made clear in this statement from Virgin Atlantic:

“With customers and staff at the front of our minds, over the past 14 months the consortium has invested more than £135 million [$174 million] to keep the airline flying for an extra year, maintaining 2,400 people in employment and ensuring customers could keep travelling…Sadly, despite the efforts of all involved to turn the airline around, not least the people of Flybe, the impact of COVID-19 on Flybe’s trading means that the consortium can no longer commit to continued financial support.”

The coronavirus pandemic (as governments are now labeling it) has been threatening devastating effects on airlines, due to travel restrictions and passengers’ increasing desire to stay away from crowded planes and airports.

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Cathay Pacific has had to put 25,000 staff on unpaid leave; Qantas CEO Alan Joyce was warning of Asian airlines going to the wall even before the first deaths outside China were reported; on Wednesday United Airlines became the first U.S. carrier to heavily slash its domestic routes; and on Thursday Norwegian Air (another carrier that’s in serious financial difficulty, thanks to the Boeing 737 Max groundings) pulled its 2020 guidance “given the uncertainty and ongoing impact on overall demand for air travel.” Planemaker Airbus may reportedly also cut its output due to the slump in demand.

Also on Thursday, the International Air Transport Association (IATA) warned that revenue losses in the air-passenger business could run as high as $113 billion across the industry this year. That’s not even factoring in the air-cargo business, estimates for which are not yet available.

“Flybe has been on the brink too many times and the coronavirus tipped it over the edge,” wrote London Capital Group’s Jasper Lawler in a Thursday note. “For a bailout to happen Flybe needed debtholders to see a clear path to profitability this year. Instead most airlines are cutting capacity and gritting their teeth for what will likely be the worst period for the industry since the European debt crisis.”

Flybe may be the biggest company to go under as a result of the outbreak, but it is not the first. A few days ago, the Japanese cruise ship operator Luminous Cruising filed for bankruptcy protection, blaming customer cancellations that were triggered by the deadly contagion on the Diamond Princess.

Again, Luminous Cruising was a company that was already experiencing financial difficulties before the virus struck.

It is no surprise to see travel companies become the first corporate casualties of the coronavirus outbreak, given that travel restrictions were the first measures instituted in an attempt at containing its spread. With containment having failed, the question now is whether the sector is acting as a bellwether for others.

More must-read stories from Fortune:

How to think about COVID-19
—Coronavirus spreads to a previously healthy sector: corporate earnings
Coronavirus is giving China cover to expand its surveillance. What happens next?
—Coronavirus shows why we need vaccines before, not after, an outbreak
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?

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