Government agrees deal with Flybe shareholders to keep airline running

Tim Baker
The troubled regional airline was bought in February after suffering financial difficulties: PA

The Government has announced that an agreement has been reached to keep Flybe operating.

Both Business Secretary Andrea Leadsom and Transport Secretary Grant Shapps tweeted that a deal was made with the airline's shareholders.

Ms Leadsom said: "Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected.

"This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future."

The airline whose network includes more than half of British domestic flights outside of London, has a major presence at airports such as Aberdeen, Belfast City, Manchester and Southampton.

It flies some 9 million passengers a year to 170 destinations across the continent.

Both Transport Secretary Grant Shapps, left, and Business Secretary Andrea Leadsom welcomed the news (PA)

The British Airline Pilots’ Association (Balpa) said: “This is good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe.

“Balpa looks forward to discussing the airline’s future plans in detail with management, meanwhile passengers can be confident that Flybe remains an excellent choice for regional flying.

“The Government is to be applauded for stepping up to the plate to help one of the few remaining independent UK airlines and a vital one at that.”

Mr Shapps said: Delighted we've been able to work closely with Flybe to ensure Europe’s largest regional airline is able to continue connecting communities across Britain."

Airline groups have long complained that the tax restricts growth. Passengers on domestic flights pay 26 pounds in tax for a return trip - or more for longer flights or those in premium cabins.

The tax is expected to be worth 3.7 billion pounds to the Treasury in 2019-20.

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.