Ryanair may sue over the bailout for Flybe

RYANAIR boss Michael O’Leary yesterday threatened to sue the Government over its £100million lifeline for struggline airline Flybe. Branding it a ‘bailout for billionaires’ he said the rescue package ‘clearly constitutes illegal state aid’.

The Irish carrier’s outspoken chief has joined a chorus of industry voices questioning why Flybe needs a taxpayer bailout when its parent company is funded by tycoons including Virgin Atlantic’s Sir Richard Branson.

On Wednesday, Willie Walsh the boss of BA’s parent company International Airlines Group, blasted the rescue as a ‘blatant misuse of public funds’.

Loss-making Flybe was saved on Tuesday in a hastily agreed deal with owner Connect Airways, following weekend reports that it was on brink of collapse. It is thought the Government has agreed to delay for up to two years around £100million of Air Passenger Duty payments – a tax on passenger flights from UK airports – and to consider offering a loan.

The struggling airline was saved last year when it was sold to Connect for £5million. The company has now agreed to invest £30million.

But in a strongly worded letter to Chancellor Sajid Javid, Mr O’Leary, 58, pictured, called the deal a ‘ nasty cover- up’ and a ‘badly thought- out bailout of a chronically lossmaking airline’.

He warned that Ryanair would seek court action if the Government did not also grant a tax ‘ holiday’ to Flybe’s rivals. ‘Unlike Flybe, we all operate profitable business models without the benefit of being owned by billionaires like Richard Branson, Delta Airlines and Cyrus Capital,’ he added.

The letter slammed claims that Flybe provides ‘unique connectivity’ to UK regions, saying that if it did go bust most of its routes would be taken up by other carriers.

Ryanair believed that Exeter- based Flybe’s ‘ flagship’ route from London to Newquay, Cornwall, was ‘ already wellserved by train, bus and motorway alternatives, which is why the Flybe model cannot viably make profits’.

The Business Department yesterday insisted there had been ‘no state aid to Flybe’.

And in a statement on the tax holday, HMRC last night declared: ‘We have an excellent track record for supporting viable businesses with genuine short-term difficulties and will always work with taxpayers to find the best possible solution.’