Government confirms Flybe will continue to operate
Shareholders agree to put in more money
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Your support makes all the difference.Britain’s biggest regional airline, Flybe, will continue to operate after rescue talks with the Government proved successful.
“Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected,” said business secretary Andrea Leadsom. “This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.”
Flybe’s shareholders have agreed to invest more money in the airline, according to BBC business editor Simon Jack.
He tweeted: “Government pledges to review air passenger duty in run up to budget but will make changes in line with their zero carbon ambitions.”
Frank Ofonagoro, director at business advisory firm Quantuma, tells The Independent:
Flybe is in urgent need of funding support following a period of sustained losses following a profit warning in October 2018. The consortium that acquired Flybe in early 2019, led by Virgin Atlantic, appears to have underestimated the level of financial support required by the business to effect a sustainable turnaround.
The rescue talks are likely to consist of dual track process of continuing to sound out private investors, including the existing controlling shareholders, on one hand and the UK Government on the other, given Flybe’s position as a significant UK employer and Europe’s largest regional airline. A key part of these discussions will include an analysis of the potential financial outcome for each of Flybe’s financial stakeholders in the event of an insolvency, and the extent to which they can continue to provide short term support.
As part of its contingency planning, Flybe’s management will already have lined up a potential administrator and would have been planning for some weeks in advance to take control of the Flybe’s operations and, most crucially, assets, should rescue talks fail.
Flybe is reportedly planning a last-ditch plea begging ministers to defer its multi-million pound air passenger duty (APD) bill to help alleviate its cashflow crisis.
The airline has asked if it can delay paying its APD as it runs the risk of collapse, reports Sky News.
The idea of deferment is being discussed as part of a package of measures that are currently on the table during talks between Flybe's owner, Connect Airways, and the government.
Aviation consultant John Strickland told PA the failure of Flybe would have "a significant impact" on regional airports in the UK.
He said: "At a market level it doesn't look like very much.
"But if you look at the regions [Flybe serves], it's dramatic."
Passengers have been lamenting the possible collapse of Flybe, with many declaring the regional airline is "vital".
“I am on a project in Exeter until April and have been since October," Gary Whitham, who uses Flybe to commute from his home in the Netherlands, told The Guardian.
"I have heard nothing at all about Flybe’s problems. If they do go, then I would have to fly to Bristol, which is much more inconvenient for me.”
Malcolm Bell, head of tourism at Visit Cornwall, said of the potential airline failure: “It would be terrible if we lost that air link.”
Flybe is urging the government to consider a cut in Air Passenger Duty to keep the airline flying.
On the news that Flybe is urging the government to cut Air Passenger Duty, Alana Gomez, spokesperson for flight-comparison site jetcost.co.uk, said:
Yesterday’s news about Flybe was certainly very concerning for the industry, not least because of the local businesses and regions that benefit hugely from its service, so extreme measures should be considered in order to save the airline.
The airline helps commuters to travel around the UK easily and taking away this service is going to affect a lot of people, and destinations that are currently only serviced by the airline.
Flybe is a hugely important airline for many areas of the UK and its passengers and air passenger duty is equally as vital in helping to reduce our collective carbon footprint, we would recommend that other measures are looked at first, but ultimately it’s great to see the government doing what they can to save an airline.
Environmental group Friends of the Earth has called news that the government could cut Air Passenger Duty on all domestic flights to save Flybe "completely unacceptable and even reckless".
Campaigner Jenny Bates said:
It would be completely unacceptable and even reckless if the government cut air passenger duty on domestic flights.
These short UK trips are exactly the ones we need to avoid in the drive to cut aviation climate emissions to help prevent climate breakdown. Instead the government could invest more in our rail system, and make such trips more affordable.
Greenpeace UK policy director Dr Doug Parr said:
This is a poorly thought out policy that should be immediately grounded.
The Government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next.
Cutting the cost of domestic flights while allowing train fares to rise is the exact opposite of what we need if we're to cut climate-wrecking emissions from transport.
The aviation sector has got away for years with increasing its carbon footprint. The last thing we need is another incentive for them to pollute more.
Prime Minister Boris Johnson said the government is "working very hard" to save Flybe.
He told the BBC:
It's not for Government to step in and save companies that simply run into trouble.
But be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.
It's very important, for instance, where I was yesterday in Northern Ireland, and we're working very hard.
I can't go into commercially confidential discussions.
We're working very hard to do what we can, but obviously people will understand that there are limits, commercially, to what a government can do to rescue any particular firm.
But what we will do is ensure that we have the regional connectivity that this country needs.
The railway writer and historian, Christian Wolmar, described the plan to cut APD as "ridiculous".
Speaking to The Independent, he said:
It highlights the fact we have no clear transport policy and that government fails to use carrots and sticks to nudge policy in direction of greener travel.
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