Don’t make us pay our bills, beg bosses of struggling Flybe
Just a year after Virgin joined rescue of airline . . .
FLYBE was on the brink of collapse last night as bosses pleaded with ministers to defer the airline’s £106 million passenger duty bill.
Only four months after the demise of Thomas Cook, Britain’s biggest regional airline is battling for survival.
The uncertainty has thrown the travel plans of tens of thousands of passengers into chaos, and the future of 2,400 jobs into doubt. Last night it emerged that Flybe’s backers – including Sir Richard Branson’s Virgin Atlantic, Stobart Group and a hedge fund, were trying to persuade Whitehall officials to defer the huge bill while it runs short of cash during the quiet winter months.
The Connect Airways consortium, which rescued Flybe from going under less than a year ago, promised to pump £100 million into the carrier to help secure its long-term future.
But according to Sky News, Southend airport owner Stobart and fellow investor Cyrus Capital Partners have expressed reservations about investing so much money in the airline.
Sky said Business Secretary Andrea Leadsom and Transport Secretary Grant Shapps will meet Chancellor Sajid Javid today to discuss the option of backing a rescue deal.
The deal could defer the £106 million bill until 2023, but Flybe’s three shareholders would need to put ‘tens of millions of pounds’ into the company as a condition, it was claimed.
The airline, which flew more than 8.6 million passengers last year, could collapse into administration as early as tonight unless the Government agrees to defer the bill.
The collapse would put the jobs of thousands of Flybe staff at risk, many in key northern constituencies including Manchesunderstood ter, Liverpool and Newcastle. But unions warned it would threaten another 1,400 jobs in the supply chain, including baggage handlers at regional airports. The Exeter- based airline said it would not comment on ‘rumour and speculation’. The Government also refused to comment.
Most Flybe passengers are
to not be protected by the Atol travel industry compensation scheme, because they did not book their flights as part of a package holiday. This means those stranded abroad could be forced to book alternative transport and will not necessarily be covered for any losses.
Rory Boland, travel editor, at consumer group Which? said: ‘The speculation that Flybe might be the next airline to go under will be a huge concern for its customers and for those who regularly use airports where the airline is the main carrier.
‘While flights will be going ahead as normal for the time being, this is a stark reminder for passengers to ensure they have protections such as airline failure insurance and to book flights with a credit card so they can reclaim the cost with their card issuer should an airline go bust.’ Union bosses complained that members were being kept in the dark. Brian Strutton, general secretary of pilots’ union Balpa, said: ‘I am appalled that once again the future of a major UK airline and hundreds of jobs is being discussed in secret with no input from employees or their representatives.’ Nadine Houghton, GMB national officer, said: ‘If Flybe goes belly up, it won’t just be direct employees at risk but 1,400 supply chain jobs as well. Our economy is tanking. The last thing we need is an airline to go under.’
In a leaked memo to Flybe staff, Connect Airways chairman Mark Anderson urged them to ‘remain focused’ and not to engage in ‘unhelpful and unproductive speculation’.
‘Huge concern for customers’
VIRGIn Atlantic founder Sir Richard Branson was last night facing a backlash amid fears he and fellow investors could pull the plug on Flybe less than a year after coming to its rescue.
The entrepreneur’s airline teamed up with Stobart Group and hedge fund Cyrus Capital to snap up Flybe on the cheap in early 2019, with the promise to invest £100m to turn the ailing carrier around.
The deal – which was completed in March – all but wiped out shareholders, with investors receiving 1p a share as part of the £2.2m rescue. Shares had floated at 295p in 2010, meaning many faced huge losses.
The consortium, known as Connect, insisted this was the ‘most realistic means’ of securing the airline’s long term future after it had been hammered by high fuel costs, competition and spiralling debts.
But it is understood that two of Connect’s shareholders – Stobart and Cyrus – are now reluctant to inject £100m into Flybe in the coming years unless ministers agree to delay the airline’s multimillion pound air passenger duty bill. This has left the airline on the brink of collapse, according to Sky news.
Connect’s takeover of Flybe enabled Branson ( pictured) to resurrect his ambitions to run a UK domestic airline after the demise of Virgin’s Little Red offshoot in 2014.
For Stobart the deal represented an opportunity to get more passengers to fly from Southend Airport, which it owns.
But their ambitions appear to be quickly unravelling as weak bookings and high levels of debt mean they have been forced to go cap in hand to the Government.
Rescue talks took place over the weekend and are continuing as they try to thrash out a deal.
The uncertainty has thrown the travel plans of thousands of people with Flybe bookings into chaos – with 8.6m passengers flying with the airline last year.
Graham Stringer, Labour MP and a former member of the commons Transport Committee, said: ‘These routes that Flybe operate are absolutely vital for a number of communities that are remote from the rest of the UK like the Isle of Man, northern Ireland and parts of the South West.
‘It’s therefore very concerning that 12 months after the new owners promised to keep Flybe going we are faced again with the airline potentially going bust.’
With the jobs of up to 2,400 Flybe staff at risk, union leaders are furious they have been frozen out of talks.
Brian Strutton, general secretary of the British Airline Pilots Association), said: ‘This is an appalling state of affairs and we demand that the owners of Flybe – Virgin, Stobart and Cyrus – and the government departments involved talk to us about Flybe. We have a right to be consulted and the staff have a right to know what is going on.’ nadine Houghton, GMB national officer, said: ‘GMB has concerns about any business model that involves a short term approach to investment while playing fast and loose with peoples jobs and livelihoods.’
A Flybe spokesman said: ‘Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned. We don’t comment on rumour or speculation.’
Spokesmen for the Business department and the Department for Transport would not comment ‘on speculation or the financial affairs of private companies.’
Stobart and Virgin declined to comment last night.