Government considers deferring Flybe’s APD payments in bid to rescue carrier

The Government is believed to be considering deferring airline Flybe’s air Passenger Duty (APD) tax payment, in return for its owners pumping fresh investment into the carrier, in a bid to save it from collapse.

Sky News is reporting that Business and Transport Secretaries Angela Leadsom and Grant Shapps will meet with Chancellor Sajid Javid today over moves to defer Flybe’s £106m APD payment for three years to give it breathing space to implement a turnaround plan to save the business and 2,000 jobs.

But the plan involves the airline’s owner, Connect Airways, pumping in “tens of millions of pounds” in return.

Connect Airways comprises three shareholders, Virgin Atlantic, hedge fund Cyrus Capital, and Carlisle-based Stobart Group which acquired the assets of Flybe last February for £2.8m.

If approved, the plan could give Flybe time to survive the tough Winter months and formulate a survival plan.

However, Sky News said people close to the process warned on Monday night that there was considerable urgency surrounding the talks between the owners of Connect Airways and the Government.

One said: “There is no guarantee that the company will be saved.

“The survival prospects have improved but it’s not out of the danger zone.”

A decision could be forthcoming today.

Accountancy firm EY has been placed on standby to act as administrator to Flybe should rescue attempts fail.

Flybe operates from 25 UK airports, including Manchester and Liverpool John Lennon.