Fresh fears over Flybe's future after failing to secure £100 million loan

4 March 2020, 14:46

The struggling airline was saved earlier this year but has been unable to obtain extra cash from the Government
The struggling airline was saved earlier this year but has been unable to obtain extra cash from the Government. Picture: PA

By Megan White

Flybe is facing fresh fears that it could collapse after failing to secure a £100 million loan.

The struggling airline was saved earlier this year but has been unable to obtain extra cash from the Government.

According to the Financial Times, the company only has enough resources to survive "until the end of this month".

The regional airline has been hit by a slump in bookings since the outbreak of the coronavirus.

As part of the January rescue deal, it agreed an arrangement to defer tax payments of "less than £10 million" with HM Revenue and Customs.

Ministers also agreed to hold a review into Air Passenger Duty (APD).

The structure of APD - which adds £26 to the price of most return domestic flights such as those operated by Flybe - could be altered in next week's Budget.

Flybe serves around 170 destinations and has a major presence at UK airports such as Aberdeen, Belfast City, Manchester and Southampton. It flies the most UK domestic routes between airports outside London.

A series of issues have affected the airline's finances, including rising fuel costs, falling demand, competition from road, rail and other airlines, plus a weakening of the pound.

It was bought by a consortium comprising Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019, but has continued to make losses.

Rival Ryanair has predicted the drop in demand for flights due to the coronavirus will result in some European airlines failing in the coming weeks.

A Flybe spokesman would not comment on its financial situation.

A Department for Transport spokeswoman said: "We won't comment on speculation."

At the time of Flybe's rescue, rival airlines complained that they should not be penalised for their own success and should also be given a tax holiday.

British Airways owner International Airlines Group claimed the arrangements breached state aid rules.

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