The Government has agreed a rescue plan for troubled Exeter-based airline Flybe.
Ministers today (Tuesday, January 14) agreed to work with the firm to figure out a repayment plan for a significant tax debt that is reported to top £100million.
Business Secretary Andrea Leadsom said the deal would keep the company, based at Exeter Airport, operating.
She tweeted: “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.”
Flybe is a major employer in #EastDevon and I will always stand up for local jobs and connectivity. Earlier, I asked Aviation Minister Paul Maynard to ensure every path is explored to keep the airline serving the South West and beyond. pic.twitter.com/4NRCTmIJ4z
— Simon Jupp MP (@simonjamesjupp) January 14, 2020
— Simon Jupp MP (@simonjamesjupp) January 14, 2020
As part of the agreement, Flybe’s shareholders, which include Virgin Atlantic and Stobart Group, have agreed to put more money into the business.
The Government has promised to review the £26 Air Passenger Duty that is levied on domestic UK return fights which has added to the airline’s losses.
Lucien Farrell, the chairman of Connect Airways – which owns Flybe – said the group had agreed to ‘keep Flybe flying with additional funding alongside government initiatives’.
“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,” he added.
Transport Secretary Grant Shapps said the Government had worked closely with Flybe to ensure its planes were able to continue flying.
He said the Department for Transport would conduct an urgent review that will seek to assess how it can improve regional connectivity and ensure airports continue to function across the country.
“Flybe plays a critical and unique role in the UK aviation system, supporting the development of the regions, providing essential connectivity to businesses and stimulating the growth in trade,” the boss of the Airport Operators Association, Karen Dee, said in a statement welcoming the rescue deal.
Flybe, which flies to 170 different destinations, has been struggling under the weight of an estimated £106million bill for air passenger duty as well as a slowdown in demand that has hurt the airline’s finances.
Mark Anderson, Flybe’s chief executive, said: “Flybe is made up of an incredible team of people, serving millions of loyal customers who rely on the vital regional connectivity that we provide.
“This is a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future.”
In a joint statement, council leaders, together with the Heart of the South West Local Enterprise Partnership (HotSWLEP), welcomed the news.
Devon County Council leader John Hart said: “This will be an immense relief to the hundreds of Devon people who work for Flybe directly, the companies that supply them and the businesses and travellers who use these important links to other parts of the UK and foreign destinations.
“We can ill afford to lose any links with the rest of the country and the access Flybe provides to international destinations and we need similar security for our road and rail links.
“Devon’s chief executive, Phil Norrey, and I have invited the leaders of Flybe and Virgin to meet with us to see what we can do as local councils, along with East Devon and Exeter, to help them continue to benefit our local economy.”
Cllr Ben Ingham, leader of East Devon District Council, said: “I very much welcome Government’s commitment to regional connectivity, thus securing 1000 jobs in our area and providing much-needed connections for businesses and residents.
“We will continue to work in partnership with the company to ensure that there is a clear and sustainable vision for the future and we stand ready to to do everything we can to help realise this. This includes taking forward proposals to develop a sustainable aviation cluster at Exeter Airport.”
Cllr Phil Bialyk, leader of Exeter City Council, said: “I am absolutely delighted with the announcement. There were 2,400 people throughout the country, and over 1,000 locally who were worrying about their jobs with the loss of Flybe. I am so pleased that the Government has seen sense and is supporting them.
“It is not an ailing industry, it is an industry that has been affected widely by a number of factors. But I am so pleased for those families who in this moment now know that their jobs are secure.
“We are working together with the Leader of Devon County Council and the leader of East Devon District Council, to see what else we can do, in our own little way as local authorities, to support that business and the jobs it creates, and I am so pleased about that.”
Chair of the Heart of the South West LEP, Karl Tucker, said: “We welcome the announcement confirming the commitment of investors and Government to support regional connectivity.
“We are ready to work with Flybe to develop a resilient and secure business strategy, as a key component of delivering economic growth in a low carbon economy throughout the Heart of the South West.
“As part of our clean growth strategy, we are keen to see the development of low carbon air travel through electric or similar technologies, providing new models of propulsion.”