Flybe is saved: Government strikes deal with airline’s shareholders to keep it afloat
Flybe shareholders have struck a deal with the government to keep the regional airline operating.
Business minister Andrea Leadsom today said she was ‘delighted’ to have reached an agreement with the airline to ensure ‘UK regions remain connected’.
‘This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future,’ she added.
It comes after Boris Johnson said ministers would not ‘step in and save’ Flybe amid claims air passenger duty could be cut on all domestic flights in Britain – saving travellers £13 a trip.
The airline was on the brink of collapse earlier this week as bosses pleaded with the government to defer its multi-million-pound air passenger duty bill.
Flybe shareholders have struck a deal with the British government to keep the regional airline operating, business minister Andrea Leadsom said on Tuesday
Mr Johnson told the BBC: ‘It’s not for Government to step in and save companies that simply run into trouble.
‘But be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.
‘It’s very important, for instance, where I was yesterday in Northern Ireland, and we’re working very hard. I can’t go into commercially confidential discussions.
‘We’re working very hard to do what we can, but obviously people will understand that there are limits, commercially, to what a government can do to rescue any particular firm.
It comes after Boris Johnson said ministers would not ‘step in and save’ Flybe amid claims air passenger duty could be cut
‘But what we will do is ensure that we have the regional connectivity that this country needs.’
Chancellor Sajid Javid was today scheduled to discuss a rescue deal with the business and transport secretaries to postpone a £100million tax payment until 2023.
Applying the move to the whole airline industry would avoid breaching European Union state aid rules.
Passengers on domestic flights pay £13 in APD for a normal single journey under current rules, with higher rates for longer destinations and premium class.
A reduction in APD – a tax passed directly to the government – would therefore lead to lower flight ticket costs, presuming that airlines would also reduce their prices.
Flybe has long claimed that APD is unfair by disproportionately affecting domestic customers who must pay it every time they take off from a UK airport.