NEWS


Business secretary Andrea Leadsom


Government confirms deal to stave off Flybe collapse


Ian Taylor


The government confirmed a deal to prevent Flybe going into administration on Tuesday evening after the airline’s owners reportedly asked to defer payment of a £106 million bill for APD. Details had yet to


The deal followed talks involving Leadsom, transport secretary Grant Shapps and chancellor Sajid Javid on whether to axe APD on domestic flights in part or in whole. Earlier on Tuesday, aviation


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emerge as Travel Weekly went to press, but business secretary Andrea Leadsom announced: “We’ve reached agreement with Flybe’s shareholders to keep the company operating, ensuring the UK regions remain connected.” It was understood the Connect


Airways consortium of Virgin Atlantic, Cyrus Capital and Stobart Group which owns Flybe had agreed to put in more money in return for a review or partial reform of APD.


travelweekly.co.uk


minister Paul Maynard confirmed Shapps was in “discussions in Whitehall on behalf of the airline”, telling MPs: “We understand Flybe’s role in delivering connectivity


across the UK.” The level of government


involvement was in stark contrast to ministers’ refusal to save Thomas Cook last September. Then Leadsom refused to intervene and Cook chief executive Peter Fankhauser had to deal solely with a Department for Transport official. The crisis came less than a year


after Flybe was rescued from collapse


by the consortium, which pledged to invest up to £100 million after paying just £2.8 million for Flybe’s assets and £2.2 million to shareholders. It was unclear how much of this


money had since been committed, with the government insisting the investors now make “tens of millions” available. Virgin Atlantic put former


executive vice-president Mark Anderson in charge of Flybe last June and planned to rebrand the carrier as Virgin Connect this spring. Anderson sought to reassure staff on Monday, insisting: “We continue to operate as normal. All my energy is focused on continuing to turn Flybe around.” Shai Weiss, Virgin Atlantic chief


executive, insisted last year that Virgin had “absolutely not bought Flybe for the short term”. News of the potential collapse


appeared to come from within Flybe. Industry sources confirmed no one was aware of problems until Sky News broke the story, but said a rapid rescue was vital. A senior industry source said: “The


story has done serious damage. Card acquirers are withholding payments. Everyone Flybe owes money wants paying immediately. Everyone has withdrawn Flybe’s credit.” A second industry source agreed:


“There was a very short window to complete a rescue.” A leading aviation analyst told


Travel Weekly: “Flybe had to shrink its fleet quickly and I don’t know that it has. It’s not clear what [Virgin] has done.” Another aviation source said:


“Everyone wants Flybe to continue operating,” but “more money needs to go into Flybe from somewhere.”


16 JANUARY 2020 5


PICTURE: Shutterstock


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