Talk to us today in confidence0800 970053907833 240747

Rescue plan agreed for Flybe

15 January 2020

Be the first to comment

Flybe saved by Government Deferring Tax Bill

UPDATE 15.01.2020

After a day of talks with the governmental departments, the Government has agreed a rescue plan for Flybe. 

Ministers have agreed to work with the regional airline to arrange a repayment plan of its £100m tax bill. As well as this, the firm's owners, including shareholders Virgin Atlantic and Stobart Group, have agreed to pump more money in. This deal aims to keep the company operating, much to the benefit of its 8m customers and 2,000 employees.

The Government has also promised to look further into the current air passenger duty that is levied on domestic UK return flights, which added to the airlines losses. 

Business Secretary, Andrea Leadsom, says how delightful this news is. 

Flybe Boss, Mark Anderson remarks how the outcome is positive and allows ''focus on delivering for our customers and planning for the future''.

Without knowing what attempts Flybe made to pay off this debt then it is likely that this will be the largest Time to Pay Arrangement by HMRC

Sky News reports that regional airline, Flybe are seeking a buyer to secure additional finance, in order to avoid collapse.

Late on Sunday night, the airline tweeted: "Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don't comment on rumour or speculation."

Flybe handle over half of Britain’s domestic flights outside London, operating around 75 aircraft and serving more than 80 airports across UK and Europe. It flies around 8.5 million passengers each year to 170 European destinations.

Accountancy firm, EY, have been put on reserve to handle groups possible administration. 2000 jobs are at risk and without a rescue deal, it would become the second major airline to collapse in four months, following the collapse of Thomas Cook Group last September.

A source close to Flybe said that the Department for Transport and Department for Business, Energy and Industrial Strategy had been working to determine if the Government could provide any emergency finance to the company. However, it remains unclear how any rescue financing involving the Government may be structured.

Just last March, the troubled carrier was rescued by a consortium, known as Connect Airways, consisting of Virgin Atlantic, Stobart Group (which owns Southend Airport) and Cyrus Capital Partners. The three bought Flybe for a nominal price of £2.8m, acquiring its assets and operations. They promised to pump tens of millions of pounds in to keep the loss-making airline afloat. There was plans to rebrand the airline as Virgin Connect later this year, with the route network being adjusted to increase its connections with Virgin Atlantic services from Heathrow and Manchester. However, it is said that the proposals were more onerous, hence the airline being left on the brink of collapse.

This is not the first time Flybe have seen red. Just a year ago they came close to an outright collapse, amid a takeover battle that left shareholders fuming that their equity had been left worthless.

In Autumn 2018, a formal sale process was launched, with a toxic mix of a volatile currency, rising fuel costs and Brexit uncertainty said to be the blame.

Industry price wars has also been named a factor of concern for airlines and their financial performance in the last few years.

The Department for Transport decline to comment, as did EY and Stobart Group.

Passengers are advised to arrive as normal.

You are currently offline. Some pages or content may fail to load.