This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2020/jan/14/flybe-saved-after-successful-last-ditch-talks

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
Flybe saved after successful last-ditch talks Flybe saved after last-ditch talks
(32 minutes later)
Details of government rescue deal with shareholders yet to be released Treasury’s promised review of airline passenger duty enough to persuade shareholders to commit more funds
The future of Flybe appeared to have been secured on Tuesday night after ministers said they had reached a deal with shareholders to keep Europe’s largest regional carrier flying. The future of Flybe appeared to have been secured on Tuesday night after ministers said they had reached agreement with shareholders to keep Europe’s largest regional carrier flying.
The business secretary, Andrea Leadsom, tweeted: “Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected. This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.” The Treasury said it would review air passenger duty (APD), a tax that adds £26 per passenger to all Flybe domestic return flights, to “ensure regional connectivity is strengthened while meeting the UK’s climate change commitments to meet net zero by 2050”. The promised review was enough to persuade shareholders to commit more funds to cover ongoing losses.
Details of any rescue plan have yet to be released but the news came after talks where ministers were considering whether to cut air passenger duty (APD) on all domestic flights, and potentially allow the Exeter-based airline to defer a tax bill of three years. The review – along with another promised review of all regional transport connectivity – had featured in talks between ministers and Flybe, the Treasury said, adding: “In light of these discussions Flybe have confirmed they will continue to operate as normal, preserving flights to airports such as Southampton, Belfast and Birmingham.”
Such a rescue proposal would give Flybe time to implement a further turnaround plan, and would also avoid a breach of EU state aid rules. Treasury sources denied reports it had agreed to allow the Exeter-based airline to defer an APD bill of more than £100m for three years.
The government had been urged by MPs, unions and business to save Flybe, which carries 8.5 million passengers a year between 56 airports across the UK and mainland Europe, and serves almost two in five domestic UK flights. The chancellor, Sajid Javid, said: “I welcome Flybe’s confirmation that they will continue to operate as normal, safeguarding jobs in UK and ensuring flights continue to serve communities across the whole of the UK.
More details to follow … “The reviews we are announcing today will help level up our economy. They will ensure that regional connections not only continue but flourish in the years to come – so that every nation and region can fulfil its potential.”
Lucien Farrell, chairman of Connect Airways – the parent company of Flybe – said: “We are very encouraged with recent developments, especially the government’s recognition of the importance of Flybe to communities and businesses across the UK. As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside government initiatives.”
Flybe’s chief executive, Mark Anderson, said: “Flybe is made up of an incredible team of people, serving millions of loyal customers who rely on the vital regional connectivity that we provide. This is a positive outcome for the UK.”
The transport secretary, Grant Shapps, said his department would undertake “an urgent review into how we can level up the country by strengthening regional connectivity”. He said it would look at all the options to ensure airports could continue to play an important role in driving economic growth.
The government had been urged by MPs, unions and business to save Flybe, which serves almost two in five domestic UK flights and employs more than 2,000 people. It carries 8.5 million passengers a year between 56 airports across the UK and mainland Europe, and is the main airline at regional airports including Belfast, Southampton and its Exeter base.
The news came after a day when the prime minister, Boris Johnson, pledged that the government was “working very hard to do what we can” for Flybe and avert a further airline collapse so soon after Thomas Cook. The Conservatives had committed in their manifesto to improve regional connectivity.
The pilots union, Balpa, welcomed the news. General secretary Brian Strutton said: “This is good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe.
“The government is to be applauded for stepping up to the plate to help one of the few remaining independent UK airlines and a vital one at that.”
The company’s pleas for help to survive the winter came less than a year after it was taken over by a consortium led by Virgin Atlantic, after posting recurring losses of around £20m per year.
Flybe has long struggled financially, and the fall of sterling since the 2016 EU referendum has piled additional pressure on UK airlines, with major costs such as fuel incurred in US dollars.
The airline has argued it is particularly hard-hit by APD, which is charged on each passenger on a flight taking off in the UK. While all short-haul economy flights, including domestic, are charged at the same rate – £13 – the tax is applied to each leg of a domestic return flight. That means, for example, that a return Flybe flight from Cardiff to Manchester is taxed at £26, while the duty on a Glasgow to Malaga return costs half that.
While unions and the CBI had urged the government to help Flybe, any potential moves to ease APD were condemned by environmental groups. The MEP for South West England – a constituency that includes Flybe’s Exeter home – Molly Scott Cato of the Green party, said it was “absurd to suggest that we should provide a further boost to the aviation industry”. She highlighted that routes deemed socially necessary could be subsidised under EU rules – Flybe’s Newquay to London route is already funded with state aid.
Greenpeace UK’s chief scientist, Doug Parr, said: “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.”
Flybe flights were operating as normal on Tuesday.