LONDON — The British government said Tuesday it had reached a deal to save the struggling regional airline Flybe.
Though full financial details were not revealed, shareholders backed a plan to inject an undisclosed cash sum into the airline, whose network includes more than half of British domestic flights outside of London. The government also said it will involve a review of a tax slapped on flights that many airline groups have long complained restricts growth.
Flybe, which also has a major presence at airports such as Aberdeen, Belfast City, Manchester and Southampton, flies some 9 million passengers a year to 170 destinations across the continent.
Flybe chief executive Mark Anderson welcomed the deal as a “positive outcome for the U.K.” that will allow the airline “to focus on delivering for our customers and planning for the future.”
Sky News had reported earlier that senior ministers were discussing whether Flybe could defer this year’s estimated air passenger duty bill of 106 million pounds ($138 million) for three years, which would give it the chance to see through a potentially difficult winter. Shareholders would be required to inject cash into the carrier as part of the deal.
Britain’s Treasury chief, Sajid Javid, said he welcomed Flybe’s confirmation it will “continue to operate as normal, safeguarding jobs in the U.K. and ensuring flights continue to serve communities across the whole of the U.K.”
He said the review of the air passenger duty, which adds some 26 pounds ($34) to all domestic return flights or more for longer flights or those in premium cabins, will “help level up” the British economy.
The tax is expected to be worth 3.7 billion pounds to the Treasury in 2019-20.
The Treasury said the review will aim to bolster regional connectivity in the U.K. while meeting the country’s climate commitments to meet net zero carbon emissions by 2050.
Before the announcement, Greenpeace’s U.K. policy director Dr Doug Parr said any cuts to the tax would represent a “poorly thought-out policy that should be immediately grounded.”
The government, he added, “cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next.”
A consortium of Virgin Atlantic, Stobart Group and Cyrus Capital bought Flybe in February 2019. Known as Connect Airways, it paid just 2.2 million pounds for Flybe’s assets but pledged to inject cash into the airline to turn it around.
Flybe has struggled with a series of issues, including the weakening of the pound in light of Britain’s pending departure from the European Union. The weaker pound hurts airlines like Flybe that have significant costs in dollars but take in revenue in pounds.
It is the second U.K.-based airline in four months to face failure. Thomas Cook went bust in September.
The British Airline Pilots’ Association welcomed Tuesday’s deal that will secure the jobs of 2,400 Flybe staff.
“The government is to be applauded for stepping up to the plate to help one of the few remaining independent U.K. airlines and a vital one at that,” a spokesman said.
