Flybe confirms details of deal to dodge collapse

FLYBE HAS confirmed it has agreed a financial arrangement to defer tax payments of “less than £10m” with HM Revenue and Customs.

The airline, which was saved from collapse following a Government intervention on Tuesday, said the deal “will only last a matter of months before all taxes and duties are paid in full”.

It is understood the airline was allowed to defer its monthly air passenger duty (APD), which is paid by customers and collected by airlines to be passed to HMRC.

But the Government and Flybe have declined to confirm whether APD was the tax that they have agreed to delay payment over.

HMRC and the Government have called all tax arrangements “confidential” but said deferred tax arrangements were common.

Flybe added: “This is a standard Time to Pay arrangement with HMRC that any business in financial difficulties may use.”

Rivals have already complained they should not be penalised for their success and should also be given a tax holiday.

British Airways owner International

Ryanair, chief executive Michael O’Leary in a letter to Chancellor Sajid Javid.

Airlines Group (IAG) has already written to the European Commission, claiming the arrangements breach state aid rules.

Bosses have also written to the Government demanding answers over the exact nature of the deal, accusing ministers of a “lack of transparency”.

At Ryanair, chief executive Michael O’Leary said he would take the Government to court if other airlines were not also given an APD tax holiday.

In a letter to Chancellor Sajid Javid, he said: “Should you fail to confirm these facts within the next seven-day period, please be advised that Ryanair intends to launch proceedings against your Government for breach of UK and EU competition law, and breach of state aid rules.”

He also warned the extra cash invested in Tuesday’s deal will be used by March. “And then what?” said Mr O’Leary. “Flybe is not a viable business, it never has been. It has lurched from reconstruction to reconstruction.”

The Government said it stepped in to save the airline due to Flybe’s network of domestic flight routes, with many not operated by rival airlines.

Flybe is not a viable business, it never has been.