Government deal keeps struggling Flybe in the air

The Government has reached a deal with airline Flybe to avoid its collapse into administration and safeguard around 2,000 jobs.

Ministers have agreed to review the air passenger duty (APD) tax, which has added to losses at Flybe.

The airline operates routes from Manchester Airport and Liverpool John Lennon Airport.

The Government has pledged to review the amount of APD levied on domestic UK airline routes.

The Treasury also said it would work with Flybe on a repayment plan for its significant APD debt.

As part of the deal Flybe’s shareholders will inject more investment into the carrier, which is based in Exeter but has operations in 25 UK airports.

Business Secretary Andrea Leadsom said the deal to review APD would keep the company operating.

Lucien Farrell, chairman of Connect Airways which owns Flybe, said: “We are very encouraged with recent developments, especially the Government’s recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity.”

In February last year Connect acquired the assets of Flybe for £2.8m. Connect is made up of three shareholders, led by Virgin Atlantic, with Carlisle-based Stobart Group and hedge fund Cyrus Capital.

Welcoming the Government’s announcement regarding Flybe, chief executive of the Airport Operators Association, Karen Dee said: “Flybe plays a critical and unique role in the UK aviation system, supporting the development of the regions, providing essential connectivity to businesses and stimulating the growth in trade.

“Its domestic and international network also helps to unlock the tourism potential of those regions.

“The action the Government has taken to help secure the future of Flybe, Europe’s largest regional airline, will support the current and future jobs that this connectivity provides at UK airports and in the regions.

“We look forward to hearing more detail on the discussions between the Government and Flybe and will engage with the welcome review of APD – Europe’s highest aviation tax – so that the whole of the UK can benefit from excellent domestic and international flights.”

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