Flybe could receive £100m bailout deal to save 2,000 jobs

13 January 2020, 10:14

File photo: Flybe has held crisis talks with the Government over its future
File photo: Flybe has held crisis talks with the Government over its future. Picture: PA

By Megan White

Regional airline Flybe could receive a £100m government lifeline in a bid to save 2,000 jobs and prevent it from collapsing.

The business and transport secretaries are set to hold talks with Chancellor Sajid Javid on Tuesday about a rescue deal for the company.

Flybe could be offered the chance to defer a £100m tax payment until 2023 if investors pump tens of millions of pounds into the airline.

Andrea Leadsom and Grant Shapps will meet with Mr Javid tomorrow to discuss the proposed terms of a bailout, according to Sky News.

Around 2,000 jobs could be at risk if the firm, which handles over half of Britain’s domestic flights outside London, collapses.

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

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

Discussions were reportedly held with the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Transport (DfT) over the weekend to see whether they could provide or facilitate emergency financing.

If Flybe collapses, it would be the second UK airline to fail in four months, following the demise of Thomas Cook.

A spokeswoman said: "Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned.

"We don't comment on rumour or speculation."

Spokesmen for BEIS and the DfT issued identical statements which read: "We do not comment on speculation or the financial affairs of private companies."

The Exeter-based carrier was bought by a consortium consisting of Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019 following poor financial results.

File photo: Flybe operates many flights from Aberdeen Airport
File photo: Flybe operates many flights from Aberdeen Airport. Picture: PA

The consortium, known as Connect Airways, paid just £2.2 million for Flybe's assets but pledged to pump tens of millions of pounds into the loss-making airline to turn it around.

The holding of rescue talks with the Government indicates the financing requirements have become greater than expected.

Flybe has been hit by a series of problems, including falling demand, rising fuel costs and the weakening of the pound.

Brian Strutton, general secretary of pilots' union Balpa, said he was "appalled" that the future of another airline "is being discussed in secret with no input from employees or their representatives".

He urged the parties involved to "stop hiding and talk to us".

Connect Airways chief executive Mark Anderson said in October that the airline would be renamed Virgin Connect and he wanted it to become "Europe's most loved and successful regional airline".

Flights operated as normal on Monday morning.

The airline began as Jersey European Airways in 1979, operating regional flights from Jersey.

Its route network grew and it was rebranded British European in 2000, before becoming Flybe in 2002.