Flybe: Government in talks about taking a stake

The UK government may take an ownership stake in the troubled airline Flybe. The government is in talks with the firm and the EC to ensure any rescue deal does not break state aid rules. Officials say support provided to Flybe so far, such as a pledge to cut tax on some domestic routes, are industry-wide measures. However, the government is considering extending a loan of up to GBP100m to the loss-making airline. Government officials insist that any such loan will be on commercial terms but sources at competitors ask how the government can really mean that if the airline finds commercial lenders unavailable. There are different ways of answering those potential objections. First, charge an interest rate on a loan that fully reflects the risk that the government is taking with taxpayer money. This is the government's preferred option. Story looks at other scenarios.<br/>