UK government agrees rescue deal for Flybe

posted on 15th January 2020 by William Hayes
UK government agrees rescue deal for Flybe

The government has agreed a deal with struggling regional carrier Flybe to keep it afloat, following emergency talks yesterday.

The airline’s owners, the Connect Airways consortium, have agreed to put more money into the ailing business, while government ministers authorised a repayment plan for a tax debt thought to top £100m.

“Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected,” said UK business secretary Andrea Leadsom on Twitter on the evening of 14 January. “This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.”

Full details of the agreement were yet to emerge, but pilot union BALPA tweeted: ”This is good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe. BALPA looks forward to discussing the airline’s future plans in detail with management.”

However, the chief executive of the owner of British Airways has attacked the move as a misuse of public funds.

In a letter to Transport Secretary Grant Shapps, a copy of which has been seen by the BBC, Willie Walsh questioned why the taxpayer is picking up the tab for the airline’s mismanagement.

He pointed out that one of Flybe’s biggest shareholders Virgin Atlantic, is part owned by the US’s Delta, one of the world’s largest and most profitable airlines.

Flybe services dozens of UK domestic routes that are not flown by other airlines, making it the largest carrier to fly out of some regional airports, like Newquay.

“Flybe plays a critical and unique role in the UK aviation system, supporting the development of the regions, providing essential connectivity to businesses and stimulating the growth in trade,” the boss of the Airport Operators Association, Karen Dee, said in a statement welcoming the rescue deal.

As part of the agreement, Flybe’s shareholders, which include Virgin Atlantic and Stobart Group, have agreed to put more money into the business.

The government has promised to review the £26 air passenger duty that is levied on domestic UK return fights, which has added to the airline’s losses.