Flybe rescue: Stobart Group to invest £9m in struggling airline
STOBART Group – one of the owners of Flybe – is investing £9 million in the struggling airline as part of a UK government-backed rescue deal, it has been announced.
The regional carrier was saved from collapse on Tuesday evening following an agreement between ministers and the airline’s owner Connect Airways, a consortium including Stobart, Virgin Atlantic and Cyrus Capital.
Stobart Group yesterday said that its investment was in addition to £45 million the company had already pumped into Flybe, from a total £110 million of funding from the Connect consortium.
Although details of the government’s part of the rescue package have not been released, it is believed to involve allowing Flybe to defer £100 million of air-passenger duty payments.
In a London stock exchange update yesterday, Stobart said that Connect Airways’ turnaround plan for Flybe was impacted by a ‘delay in receiving control’ of the business.
Connect Airways, in which Stobart owns a 30% stake, announced its intention to acquire Flybe’s assets in January last year but said that it only received merger clearance from the European Commission on 5 July.
Stobart Group said: ‘This resulted in a situation in which a further injection of funds is required to ensure continued flying.’
The firm said it contributed to the cash injection after ‘working tirelessly alongside Flybe and the UK government’ to look for solutions to make the business more financially viable.
The government agreed during the talks that it would review the application of airline passenger duty, with the intention to provide a further update at the time of the March Budget.
Tuesday’s rescue agreement has been heavily criticised by rival firms, including British Airways’ owner International Airlines Group.
IAG filed a complaint with the European Commission on Wednesday, claiming the rescue deal breached state aid rules and gave the struggling airline an unfair advantage.
Downing Street has since insisted there hadbeen ‘no state aid to Flybe’ and any support that was given to the firm would be on ‘strictly commercial terms’.
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