Tuesday 14 January 2020 9:54 pm

Flybe saved from brink of collapse by government deal

Flybe has staved off collapse after shareholders and the government struck a controversial deal that will review the regional airline’s air passenger duty contributions.

Major shareholders, including Virgin Atlantic and Stobart Group, pledged to inject “additional funding” to keep the airline running. They said this would come “alongside government initiatives”.

The deal came a day after reports emerged that Flybe was in a perilous situation and facing an imminent collapse that could have cost 2,000 jobs ahead of the quiet winter period.

It has already proved controversial, however, with rivals criticising government intervention to save a failing business and environmental groups slamming the review of air passenger duty.

Willie Walsh, chief executive of British Airways owner IAG, called it a “blatant misuse of public funds”. He said it was not right for the “the taxpayer to pick up the tab” for the “mismanagement” of the airline.

The government said that air passenger duty would be reviewed for the whole market ahead of the March Budget, to the chagrin of climate campaigners.

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.”

Chancellor Sajid Javid justified the Flybe rescue deal by highlighting benefit it would provide for regional connections in Britain.

“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,” he said.

Flybe chief executive Mark Anderson said the deal was “a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future”.

Lucien Farrell, chairman of Connect Airways, the consortium that bought Flybe in 2018 and includes Virgin Atlantic and Stobart Group, said it was “very encouraged with recent developments”.

“As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside government initiatives.”