The UK regional airline Flybe will likely live on to fly another day after the UK government brokers a last-minute rescue deal on Tuesday evening.
The airline's shareholders, which include Virgin Atlantic, Stobart and an investment firm have all agreed to put in more cash to the struggling regional operator. The UK government has said it will review the air UK passenger duty ahead of the budget. It is also understood that the government has agreed to defer payment the airline was due to pay for the air passenger duty tax for three months - giving the carrier some 'breathing' time. That bill is said to be over £105 million. Some aviation commentators are indicating this could be on a rolling three-month basis - which if true could have a major impact on the whole aviation industry in the UK. Others are saying the tax bill will be deferred for three years, which would be remarkable if true.
Business security Andrea Leadsom MP said "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."
Transport secretary Grant Shapps said "Delighted we've been able to work closely with Flybe to ensure Europe's largest regional airline is able to continue connecting communities across Britain." he also promised his department would start an "urgent review into how we can level up the country by strengthening regional connectivity".
A spokesperson for Balpa - The British Airline Pilots' Association (Balpa) 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."
Following the buyout of Flybe, the consortium created Connect Airways which is the name of the holding company owned 40% by Cyrus Capital Partners, 30% by Stobart Group, and 30% by Virgin Atlantic Limited. From our understanding, the airline will continue with the planned transition later this year from the Flybe brand to Virgin Connect.
Full details of the rescue deal are yet to be released.
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