IAG boss Walsh attacks Flybe bailout

Published by Scott Challinor on January 15th 2020, 9:45am

Willie Walsh, the chief executive of British Airways owner IAG, has called the government rescue of rival airline Flybe “a misuse of public funds”.

The rescue deal was approved by three members of Boris Johnson’s cabinet, including transport secretary Grant Shapps, business secretary Andrea Leadsom and chancellor Sajid Javid.

Although the full terms of the bailout are undisclosed, it is thought that they include deferrals on Flybe’s Air Passenger Duty payments, which are thought to be in excess of £100 million.

Walsh aired his views in a letter to Shapps. The letter indicates that the consortium which owns Flybe has both Virgin Atlantic and Delta Air Lines on board, arguing that both have the resources to rescue Flybe themselves and that it was inappropriate to approach the government for public help.

Flybe's consortium of owners are known to be investing around £20 million into Flybe to supplement the bailout.

Walsh’s letter reads: “Prior to the acquisition of Flybe by the consortium which includes Virgin/Delta, Flybe argued for tax payers to fund its operations by subsidising regional routes.

"Virgin/Delta now want the taxpayer to pick up the tab for their mismanagement of the airline. This is a blatant misuse of public funds.

"Flybe's precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built.”

Despite the opposition from industry rivals, trade body Airline UK's policy director Rob Griggs was supportive of the rescue, arguing that deferral on duty payments was not akin to receiving public funds.

General secretary of the British Airline Pilots Association union, Brian Strutton, also approved of the deal.

Strutton 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”.

Lucien Farrell, who chairs Connect Airways which owns the Flybe airline, said of the deal: "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.”

Farrell added that the group had struck a deal which will “keep Flybe flying with additional funding alongside government initiatives”.

The trio of ministers approving the bailout have also signed off on conducting a future review on air passenger duties on domestic flights, a move which has been criticised by Green Party leader Caroline Lucas.

Lucas tweeted: “Addressing Flybe problems by reducing Air Passenger Duty on all domestic flights is utterly inconsistent with any serious commitment to tackle the Climate Crisis.

"Domestic flights need to be reduced, not made cheaper.”

The government has defended the move, assuring that any review of the duty will be kept in line with its net zero carbon goals.

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Authored By

Scott Challinor
Business Editor
January 15th 2020, 9:45am

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