Anger of British Airways boss over Flybe taxpayer bailout

15 January 2020, 08:49

The boss of British Airways has issued an angry response after struggling airline Flybe was handed a rescue package by the government.

Willie Walsh, the chief executive of International Airlines Group which owns British Airways, has written to Transport Secretary Grant Shapps questioning the deal.

Mr Walsh asked in a letter why the taxpayer was being asked to foot the bill as one of Flybe's biggest shareholders was Virgin Atlantic, which in turn is part-owned by US aviation giant Delta.

An agreement between the government and Flybe's shareholders to keep the airline operating was reached last night.

There had been fears the airline could collapse into administration, threatening to put the jobs of around 2,000 people at risk.

Business Secretary Andrea Leadsom announced the deal on Twitter, saying she was "delighted" to save the company, which handles over half of Britain’s domestic flights outside London.

She added: "Delighted that we have reached agreement with Flybe's shareholders to keep the company operating, ensuring that U.K. 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."

Flybe's shareholders agreed to a cash injection - understood to be in the region on tens of millions of pounds - to keep it in business "alongside Government initiatives".

Flybe's shareholders Connect Airways, a consortium including Virgin Atlantic, Stobart Group and Cyrus Capital Partners, will put in more funding as part of the agreement.

Lucien Farrell, chairman of Connect Airways, 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 and the desire to strengthen regional connectivity.

"As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside Government initiatives."

And Mark Anderson, Flybe's chief executive, 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 and will allow us to focus on delivering for our customers and planning for the future."

Earlier today it was reported that Flybe could potentially be offered to defer a £100m tax payment until 2023 if investors pump tens of millions of pounds into the airline.

It comes less than a year after the struggling airline was bailed out by Connect Airways - an association formed by Virgin Atlantic, Stobart Group and Cyrus Capital.

Flybe is Europe's largest regional carrier, flying around eight million passengers a year to 170 destinations across the continent.

But rescue talks over the weekend with the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Transport (DfT) indicated the project had become bigger than expected.

The Exeter-based airline has struggled in recent years with falling demand, rising fuel costs and the weakening of the pound.

It has a major presence at UK airports such as Aberdeen, Belfast City, Manchester and Southampton.

The consortium had paid a total of £2.2 million for Flybe's assets, and had promised further millions to bring it back from the brink of collapse.