Monday, February 17, 2020

bailout agreement between UK government and owners

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The Flybe company had already escaped bankruptcy in 2019. PHIL NOBLE / REUTERS

The British government announced Tuesday (January 14th) that it had reached a rescue deal with the owners of Flybe after several days of marathon talks to keep it from going bankrupt.

The regional airline employs over two thousand people and transports around eight million passengers a year to one hundred and seventy European destinations. It has been on the verge of bankruptcy for the past few days, a year after already escaping from it thanks to its takeover by the Connect Airways investor consortium, which includes Virgin Atlantic and the Stobart and Cyrus funds.

"I am delighted that we have reached an agreement with the shareholders of Flybe to keep the company running, and to ensure that the British regions stay connected", tweeted Andrea Leadsom, UK Minister for Business.

Emotion of the political class

The announcement of Flybe's troubles had moved the British political class in recent days, with many parliamentarians urging the government of Boris Johnson to intervene. They said the company is essential for transit through many parts of the country where there is no high-speed train, and which would have been more isolated if Flybe had suddenly stopped operating.

A Flybe bankruptcy would also have been the second major in the airline industry after the resounding bankruptcy in September of tour operator Thomas Cook, who employed nine thousand people – most of whom lost their jobs.

Mme Leadsom did not give details of the agreement reached and no spokesperson was available immediately. But local press said on Tuesday that the government is considering deferring payment of the British airline ticket tax until 2023, a tax boost of £ 100 million (€ 117 million). In return, the owners of Flybe will have to commit to injecting new financing into the company, which is accumulating the losses. According to the Press Association cooperative agency, the amount of this funding "Should be in the tens of millions of pounds area".

Also read: Price war weighs on low-cost airlines

On the British Broadcasting Corporation (BBC), on Tuesday morning, the Prime Minister said: "It is not up to the government to intervene and save businesses that are in difficulty", while emphasizing that" (he was aware) of the importance of Flybe ", especially to provide connections across the UK.

According to the BBC, the government could even decide to reduce this tax on airline tickets for the entire aviation sector, in order to comply with European state aid rules and not give the impression of flying to the aid of one company in particular, which he has refused to do in recent years.

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