Shapps flies under the radar with Flybe bailout

 

Ministers have confirmed reviews of Air Passenger Duty (APD) and regional connectivity but have not given further details of government action to rescue struggling airline Flybe.

The airline has stated that it has agreed a financial arrangement with HM Revenue and Customs to defer tax payments of ‘less than £10m’. It is believed – but not confirmed – that this refers to APD payments made by passengers, which the firm should have passed on to government.

The company has also stated that it was in discussions with the government on the possibility of a loan.

However, in a written statement to Parliament, transport secretary Grant Shapps only referred to a review of regional connectivity, as part of which the Treasury will be reviewing APD.

He told MPs: ‘These measures featured in discussions between the Department for Transport, the Department for Business, Energy and Industrial Strategy and HM Treasury and Europe’s largest regional airline, Flybe, which plays an important role in the UK’s connectivity.’

He added: ‘HMG was notified about the difficulties of Flybe on 11 January, and since then we have worked intensively with the company to understand their financial position and explore options.

‘In the light of these discussions the management and shareholders on 14 January took action to set Flybe on a recovery path.’

The moves to help Flybe have been criticised by other airline bosses, including Willie Walsh of British Airways owner IAG and Ryanair boss Michael O'Leary.

In a statement Flybe said media reporting of its arrangement with HMRC 'has been inaccurate'.

it stated that a payment plan was agreed for a debt of less than £10m and that the agreement 'will only last a matter of months before all taxes and duties are paid in full'.

The firm declined to clarify whether it has sought or obtained any other form of loan from the Government.

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