Flybe update: Airline saved but rescue package criticised

Flybe

British Airways owner IAG has filed an official complaint to the European Commission against the bailout of regional carrier Flybe.

The bailout measures include access to loans and the possibility to defer the carrier’s £100m Air Passenger Duty (ADP) bill if shareholders can make an additional investment.

Outgoing IAG chief executive Willie Walsh proclaims that Flybe’s owners Connect Airways – a consortium led by Virgin Atlantic Airways (which is 49 per cent owned by Delta Air Lines) had the resources to bail out the regional carrier and the use of government funds was a “ blatant misuse of public funds.”

The UK government struck a last-minute deal which averted the airline’s collapse and announced a review of ADP –an excise duty on ticket sales supposedly for environmental purposes.

The UK Treasury said it will be reviewing APD to ensure regional connectivity is supported while meeting the UK’s climate change commitments to meet net zero by 2050.

It added that the Department for Transport (DfT) would be carrying out a review of regional connectivity to ensure all nations and regions of the UK have the domestic transport connections local communities rely on – including regional services from local airports.

The DfT will work closely with the aviation industry, local regions and devolved nations.

Flybe has confirmed they will continue to operate as normal, preserving flights to airports such as Southampton, Belfast and Birmingham.

Aviation analysts at consultancy firm IBA reckon the need for fresh financing suggests the consortium may have underestimated the rate at which Flybe burns through cash.

A potential cut to APD may alleviate immediate concerns of administration proceedings by allowing additional time to further restructure the operator.

In a statement, Flybe said it was delighted with the support received from the government and remains committed to providing air connectivity for the UK regions with the full support of its shareholders.

Flybe CEO, Mark Anderson. said: “This is a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future.”

Competing carriers, including British Airways, have continued to argue that the rescue package breaches state-aid rules.

Thomas Cook was refused a bailout before it collapsed last year.

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