Business World

Friday 17 January 2020

Flybe saved in cash and tax policy agreement

Flybe operates dozens of internal routes in the UK, as well as a services to elsewhere in Europe including Dublin, Cork and Ireland West. Photo: PA
Flybe operates dozens of internal routes in the UK, as well as a services to elsewhere in Europe including Dublin, Cork and Ireland West. Photo: PA

Sarah Young, Alistair Smout and John Mulligan

Regional airline Flybe was rescued yesterday after the British government promised to review taxation of the industry and shareholders pledged more money to prevent its collapse.

The agreement comes a day after the emergence of reports suggesting it needed to raise new funds to survive through its quieter winter months.

After crunch talks with shareholders, Britain's finance ministry said it would review both air passenger duty (APD) and Britain's regional connectivity as part of the plan.

Flybe operates dozens of internal routes in the UK, as well as a services to elsewhere in Europe including Dublin, Cork and Ireland West. The airline carries about eight million passengers per year.

Please log in or register with Independent.ie for free access to this article.

Log In

"I welcome Flybe's confirmation that they will continue to operate as normal, safeguarding jobs in the UK and ensuring flights continue to serve communities across the whole of the UK," British Chancellor Sajid Javid said in a statement.

"The reviews we are announcing today ... will ensure that regional connections not only continue but flourish," he added.

Prime Minister Boris Johnson had said earlier that Flybe was important for Britain's transport links and that the government would do what it could to help the carrier.

"This is a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future," Flybe chief executive Mark Anderson said.

Under the deal, the Flybe shareholders agreed to put in tens of millions of pounds to keep the airline running.

Flybe, which has 68 aircraft and about 2,000 staff, was bought last year by Connect Airways, a consortium created by Virgin Atlantic, Stobart Group - the operator of Aer Lingus Regional - and investment adviser Cyrus Capital.

Lucien Farrell, chairman of Connect Airways, said it was "very encouraged" by the UK government's planned reviews and desire to strengthen regional connectivity.

"As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside government initiatives," he said.

The aviation industry has long opposed APD, a tax of at least £13 (€15) levied on passengers departing from UK airports, which raised about £3.7bn for the British government in 2018/19.

Flybe has said its business is disproportionately harmed by the tax. The airline says the tax makes its flights more expensive than rail and road alternatives because passengers travelling on return flights within the UK will pay it twice.

Greenpeace and other environmental groups, however, reacted angrily to suggestions that the UK government could help to encourage flying.

Reuters

Reuters

Also in Business