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Airline keeps flying

Virgin and Stobart back government Flybe deal

Flybe contributed

Rescued: the deal is described as good news for staff

Cash-strapped regional airline Flybe has secured a rescue deal with its investors and the government that will ensure it continues flying.

It shareholders, which include Virgin Atlantic and Stobart Group, have agreed to put more money into the business while the government will defer a tax bill.

It has agreed to review air passenger duty with the prospect of an eventual cut. To appease environmentalist there is likely to be some form of offset.

However, the bailout has been branded a “misuse of public funds” by Willie Walsh, the chief executive of the owner of British Airways, who attacked the government’s plan in a letter to Transport Secretary Grant Shapps.

“Virgin/Delta now want the taxpayer to pick up the tab for their mismanagement of the airline,” Mr Walsh said in his letter. “This is a blatant misuse of public funds.”

“Flybe’s precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built.”

Business Secretary Andrea Leadsom said the deal would keep the Devon-based company operating.

“Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected,” she said in a tweet.

The deal retains important connections and the jobs of 2,400 staff.

Lucien Farrell, the chairman of Connect Airways – which owns Flybe – said the group had agreed to “keep Flybe flying with additional funding alongside government initiatives”.

He said: “We are very encouraged with recent developments, especially the government’s recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity,” he said.

Transport Secretary Grant Shapps said the government had worked closely with Flybe to ensure its planes were able to continue flying.

He said the Department for Transport would conduct an urgent review that will seek to assess how it can improve regional connectivity and ensure airports continue to function across the country.

Brian Strutton, general secretary of the British Airline Pilots Association, described the deal as “good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe.”

This is a positive outcome for the UK

– Mark Anderson, Flybe

In a statement issued tonight, Flybe said: “We are delighted with the support received from the Government and the positive outcome for our people, our customers and the UK. 

“Flybe remains committed to providing exceptional air connectivity for the UK regions with the full support of its shareholders.”

Chief executive Mark Anderson added: “Flybe is made up of an incredible team of people, serving millions of loyal customers who rely on the vital regional connectivity that we provide. This is a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future.”

The prospect of a cut in air passenger duty has implications for Scottish government policy as the tax is due to be devolved. Holyrood ministers reversed an earlier pledge to cut the tax.

See also:

FlyBe crisis renews pressure on Scottish government’s air tax



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