Flybe saved after ministers and investors seal rescue deal

The immediate future of Flybe was secured on Tuesday night after ministers agreed a rescue deal with shareholders to keep Europe’s largest regional carrier flying. The package of measures includes a potential loan in the region of GBP100m and/or a possible short-term deferral of a GBP106m air passenger duty (APD) bill, plus a pledge to review taxes on domestic flights before the March budget. After the spectre was raised of another UK airline failure, Flybe’s owners Connect Airways – a consortium led by Virgin Atlantic – were persuaded to commit millions more to cover ongoing losses. The government is still in negotiations to finalise any loan to Flybe, and although Treasury sources denied reports that it had agreed to defer outstanding APD, it is understood that HMRC could allow the airline a short-term extension to settle its debt. The deal was condemned by BA owner IAG as “a blatant misuse of public funds”. CE, Willie Walsh, accused Virgin of “wanting the taxpayer to pick up the tab for their mismanagement of the airline”. Any government loan would also attract EU commission scrutiny for breaching state aid. However, the EU approved loans made last September by the German government to save Condor, a subsidiary of the Thomas Cook Group, when the UK allowed its sister airline to go bust.<br/>