EY, which has been acting as administrator since Flybe’s failure in March, said there had been “significant interaction” with more than 200 parties interested in buying the airline’s assets, including 20 non-binding offers so far.

“Negotiations with interested parties continue, however, the timeframes to complete any sale process are challenging whilst global travel restrictions remain in place due to the Covid-19 coronavirus pandemic,” said EY in a report to creditors.

“This, coupled with uncertainty surrounding the future of the airline industry as a whole, has resulted in capital constraints, eroding valuations and diminished bidder appetite.”

EY also revealed its intention to continue appealing against a decision made in March to revoke Flybe’s operating licence by the CAA’s Consumer and Markets Group (CMG).

An initial appeal by EY against revocation of the licence was rejected by the CAA in April. But Flybe’s administrators have stated their intention to further appeal to transport secretary Grant Shapps to get the original decision reversed.

“It is unlikely that a business sale, including the transfer of existing employees, will be possible if the operating licence is revoked since it prevents the sale of the airport slots, which would be central to any bid for the business,” added EY in the creditors report.

Flybe collapsed in March when Connect decided to pull its funding for the business owing to the impact of the coronavirus crisis.

In the report, EY has identified a total deficit to Flybe creditors of £427 million, including £317.6 million to unsecured creditors (mostly passengers) with trade creditors being owed around £32.4 million.

Flybe creditors include several UK airports such as Southampton, Birmingham, Belfast George Best, Manchester, Glasgow, Aberdeen and Edinburgh.

Unsecured creditors are unlikely to get any of their money back, according to EY because Flybe has “insufficient property to enable a distribution to be made” to them.