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UK government could help save Flybe with 'rescue package'

Yahoo! Finance UK logo Yahoo! Finance UK 14/01/2020 Tom Belger
a small plane sitting on top of a runway: EXETER, ENGLAND - OCTOBER 18: A aircraft operated by the airline Flybe, taxis down the runway at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images) EXETER, ENGLAND - OCTOBER 18: A aircraft operated by the airline Flybe, taxis down the runway at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images)

The UK government is reported to be considering a rescue package for the airline Flybe to save it from collapse.

The leading regional airline, which has more than 2,400 staff, is said to be on the brink of administration after a difficult winter. It said on Twitter it does not “comment on rumour or speculation.”

Chancellor Sajid Javid will meet business secretary Andrea Leadsom and transport secretary Grant Shapps for emergency talks to thrash out a government response, according to Sky News.

a blue and white plane sitting on top of a runway: Photograph: Phil Noble/Reuters © Provided by The Guardian Photograph: Phil Noble/Reuters The airline operates a significant proportion of all UK domestic flights, and its routes are seen as strategically important for connectivity across Britain.

Deferring loss-making Flybe’s air passenger duty bill, estimated at £106m, for three years is said to be one option under discussion. It could be made conditional on Flybe’s shareholders injecting extra cash.

The government could slash air passenger duty on all domestic flights rather than just Flybe’s, in a bid to comply within EU state aid rules.

Meanwhile accountancy firm EY has been put on standby to handle the potential administration of the group, Sky News said, citing unnamed aviation industry sources.

Flybe said in a statement on Twitter on Sunday: “Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don’t comment on rumour or speculation.”

John Strickland, an industry analyst, told PA that if Flybe collapsed it could have a “significant impact” on the viability of some UK airports outside London.

“At a market level it doesn’t look like very much. But if you look at the regions, it’s dramatic,” he said.

Video: "Flybe future uncertain" (The Independent)

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Nadine Houghton, national officer at the GMB union, warned 1,400 jobs in its supply chain could also be at risk as she called for the government to step in.

She said: “Our economy is tanking. The last thing we need is an airline to go under – especially one which provides a vital public service in some parts of the country.”

Flybe has been struggling for some time and was bought by a consortium called Connect Airways, which includes Virgin Atlantic, Stobart Group and Cyrus Capital, in February last year.

If Flybe fails to secure new cash, it could prompt the second collapse of a major airline in the UK in less than six months.

Thomas Cook, the world’s oldest travel operator, collapsed into administration in September, leaving 150,000 holidaymakers stranded and putting 9,000 jobs in the UK at risk.

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