UK Government Approves Flybe Rescue Deal

Following reports of a dire situation on the cards, Flybe has received some good news today. The United Kingdom’s government has announced that it will defer part of Flybe’s tax liabilities.

Flybe Embraer Aircraft
Flybe has managed to find another way out of its troubles. Photo: Flybe

Continuous struggles

The airline has been facing financial difficulty for years, which resulted in a rescue attempt by Connect Airways, a consortium led by Virgin Atlantic and Stobart Air. However, this only temporarily halted the problems as the airline this week consulted the UK government to prevent a possible collapse.

Sky News reports that the British carrier has been able to conclude negotiations with UK authorities. The deal includes a tax holiday and the injection of £20m from the airline’s leadership. This is in the hope that the firm will be able to steer itself in a healthy direction going forward.

Moreover, HM Revenue & Customs (HMRC) agreed to defer a large chunk of Flybe’s tax liabilities. This deal between Connect Airways and the government will keep 2,400 jobs going, which authorities are keen to keep afloat.

Flybe Embraer Jet
The regional airline is based in the English county of Devon. Photo: Flybe

Government support

UK Chancellor of the Exchequer Sajid Javid spoke of the importance of Flybe’s operations.

“I welcome Flybe’s confirmation that they will continue to operate as normal, safeguarding jobs in UK [sic] and ensuring flights continue to serve communities across the whole of the UK,” he said, as reported by Sky News.

“The reviews we are announcing today will help level up our economy. They will ensure that regional connections not only continue but flourish in the years to come – so that every nation and region can fulfill its potential.”

Following the deal, Javid will examine reforms to the way that Air Passenger Duty (APD) affects domestic flights. Furthermore, the Department for Transport will oversee a review of Britain’s regional connectivity. At the moment, Flybe has a strong presence across the UK, serving 25 airports in the country.

Flybe, Urgent Talks, UK Government
Flybe helps connect passengers in underserved regions in the UK. Photo: Getty Images

National interest

The government will be keener than ever to support UK-based airlines. The country is set to leave the European Union on January 31st and there has been a lot of speculation about how this could impact the aviation industry.

Additionally, the government has recently expressed its interest in investing in modern aviation innovations. Last month, it announced that it will invest £300 million to develop greener forms of air transport.

For Flybe, this is a much-welcomed approach. The airline’s CEO Mark Anderson shared that the deal is a positive outcome for the nation. It will also allow his company to focus on its passengers and future plans.

Meanwhile, Connect Airways chairman Lucien Farrell shared that he is encouraged by the government’s recognition of Flybe’s importance to local communities.

Simple Flying reached out to Flybe for further comment on the news but did not hear back before publication. We will update the article with any further information.

What are your thoughts about this outcome for Flybe? Let us know what you think in the comment section.