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Flybe shares rescue package information

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FLYBE has revealed details of its publicly funded rescue package – as the UK government faces mounting criticism for stepping in to save the carrier.

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The airline yesterday said it had been allowed to defer £10 million in air passenger duty payments, just a fraction of the £106m total bill.

It added that the deal ‘will only last a matter of months before all taxes and duties are paid in full’ and that it was a ‘standard Time to Pay arrangement with HMRC that any business in financial difficulties may use’.

Separately, Mark Anderson, chief executive of Flybe’s parent company, Connect Airways, told staff that it was also in talks with the government over a loan but insisted it was not a bailout.

In a video seen by the BBC, Mr Anderson tells employees: ‘We are in conversation with the government around a financial loan – a loan, not a bailout – a commercial loan, but that is the same as any loan we’d take from any bank.

‘The government will not lend if they do not believe there is a credible plan. No one is going to throw good money after bad.’

As part of the deal, Flybe’s owners have agreed to pump millions into the airline.

But rival operators have rounded on the government, saying that Flybe’s ‘tax holiday’ gives it an unfair advantage.

Ryanair boss Michael O’Leary has written a strongly worded letter to UK chancellor Sajid Javid, saying the deal breached state aid rules, and has threatened legal action unless the help is extended to other airlines.

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Speaking to BBC Radio 4’s Today programme, he said: ‘So the government is stepping in here, lending them APD (air passenger duty), which is unfair on all the other UK airlines.

‘And all these shareholders have to do is put in another £27 million. They have confirmed they put £110 million in last year, they have burned their way through that in 12 months, so £27 million will be gone by the end of March.

‘And then what? Flybe is not a viable business – it never has been. It has lurched from reconstruction to reconstruction.

‘This is the government misusing state funds to discriminate in favour of Flybe. It is in breach of competition rules and it is in breach of state aid rules.’

Earlier this week IAG, the owners of British Airways, made an official complaint to the EU, arguing that the package breached state aid rules.

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