Flybe reaches rescue deal with shareholders
Troubled regional airline Flybe has struck a rescue deal with its investors and the government.
The firm’s shareholders, which include Virgin Atlantic and Stobart Group, have agreed to put more money into the loss-making airline.
Meanwhile, the government has agreed to review air passenger duty, which had added to the firm’s losses.
Business Secretary Andrea Leadsom said the deal would keep the company operating.
- ‘Valuable connectivity’: Why Flybe matters
“Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected,” she tweeted.
“This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.”
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”.
“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.
The government has promised to review the amount of air passenger duty levied on domestic UK airline routes.
But the prospect of cutting taxes on flying has angered climate activists who argue that flying is the most carbon intensive mode of transport.
However, the government has said the review of the tax will be consistent with its zero carbon targets.
The Treasury also said it would work with Flybe to figure out a repayment plan for the significant air passenger duty debt.
The British Airline Pilots Association, a union, welcomed the news.
“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,” general secretary, Brian Strutton said in a statement.