U.K. Government Agrees to Rescue of Regional Airline Flybe

  • In World
  • 2020-01-14 18:36:51Z
  • By Bloomberg

(Bloomberg) -- Britain agreed to back a plan to rescue regional carrier Flybe from a collapse that would have left some of the most economically challenged parts of the country with diminished transport links.

The government reached an agreement with the carrier's shareholders to ensure U.K. regions remain connected, Business Secretary Andrea Leadsom said Tuesday in a tweet, without disclosing details.

The deal followed talks with Flybe parent Connect Airways, made up of Virgin Atlantic Airways Ltd., Cyrus Capital and Stobart Group. Bloomberg reported earlier that discussions concerned a suspension of air passenger duty.

The rescue is unusual for a Conservative administration in a country that has long eschewed state bailouts. Monarch Airlines, Flybmi and Thomas Cook Group Plc all failed without government help in the past 2 1/2 years. But with Brexit two weeks away, Flybe's unique business profile in serving provincial towns and cities made it a different proposition.

While the airline carried only 8 million passengers last year, compared with almost 100 million at EasyJet Plc, it ranks No. 1 on U.K. domestic routes and provides vital links to London and the continent from cities spanning Belfast in Northern Ireland to Exeter in England's far southwest and Inverness in the Scottish Highlands.

The British Airline Pilots' Association said Monday that if Flybe didn't exist, "it would have to be invented" to maintain crucial links and support the economy. A collapse would effectively leave some locations without an air service or reliant on rail journeys spanning many hours, and Prime Minister Boris Johnson earlier told the BBC he understood that the U.K.'s infrastructure was deficient in some parts of the country.

Flybe was delisted in March after its purchase by Connect Airways for 2.2 million pounds ($2.9 million), with the consortium also providing 100 million pounds in rescue funding. It had struggled for years with the narrow margins on regional routes, where demand is lower, together with fluctuating fuel prices and uncertainty surrounding Brexit.

The carrier operates 68 planes on almost 140 routes serving 56 cities across the U.K. and Europe. Some of its flights, like a 130-mile service from Cardiff to Anglesey off the north Welsh coast, are among the shortest in the industry.

(Updates with political context starting in fourth paragraph. An earlier version of the story corrected a misspelt name.)

To contact the reporters on this story: Siddharth Philip in London at sphilip3@bloomberg.net;Charlotte Ryan in London at cryan147@bloomberg.net;Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Christopher Jasper

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.


More Related News

Amazon's Market Power to Be Investigated by New York AG

(Bloomberg) -- Attorneys general from New York and California are partnering with the Federal Trade Commission to investigate Amazon.com Inc.'s online marketplace, according to people familiar with the matter, ratcheting up scrutiny of the world's largest e-commerce company.The three agencies will work

The Rich Still Want to Buy Their Ferraris
The Rich Still Want to Buy Their Ferraris

(Bloomberg Opinion) -- The business of making Ferraris is doing embarrassingly well in the pandemic.Covid-19 has affected the production and delivery of luxury cars, but not demand from the wealthy to acquire them, as analysts have noted. The financial impact of the virus on Ferrari NV's performance is, for now, looking like only one quarter of lost earnings. Management has handled the crisis well.Revenue fell 42% year-on-year in the second quarter, with vehicle shipments dropping 48%, Monday's results revealed. Production slipped after factories were closed to protect workforces, and the shuttering of dealers hampered deliveries. The company decided against taking the axe to capital...

Home Security Stocks Sink After Salvo From Google-ADT Alliance
Home Security Stocks Sink After Salvo From Google-ADT Alliance

(Bloomberg) -- Alarm.com Holdings Inc. plunged as much as 20%, the most intraday in almost five years, after Alphabet Inc.'s Google announced a partnership to create smart-home security products with ADT Inc.Stifel analyst Brad Reback said the pact is a "potential long-term issue" for Alarm.com, which

HSBC's Split Personality Is Dragging It Down

(Bloomberg Opinion) -- HSBC Holdings Plc can't seem to get a break. Even the financial-market boom that buoyed profits at some banks wasn't enough to save Europe's biggest lender from missing estimates. Chief Executive Officer Noel Quinn said HSBC is looking at accelerating restructuring plans that are expected to lead to the loss of 35,000 jobs. He may need to think even more radically.The bank reported second-quarter adjusted pretax profit fell 57% from a year earlier to $2.59 billion, versus an estimate of $2.94 billion. HSBC lifted its projection for loan losses to between $8 billion and $13 billion for this year, as it contends with the economic impact of the Covid pandemic. The...

Think Big Oil Makes Its Cash Pumping Crude? Not Anymore.
Think Big Oil Makes Its Cash Pumping Crude? Not Anymore.

(Bloomberg Opinion) -- Trading saved European Big Oil from the full impact of this year's oil crisis. It's not the first time that massive profits from in-house trading desks ameliorated poor operating results from the core business of finding and producing hydrocarbons - and it won't be the last. But the companies may struggle to carry this safety net into the era of decarbonization.As my Bloomberg Opinion colleague Chris Hughes wrote this week, Royal Dutch Shell Plc proved it could make a profit even amid the carnage of the oil market in the April-June quarter. The slump in oil and gas production - down 7% year on year and 11% quarter on quarter - and collapse in prices was offset by...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: World