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Stobart blames merger clearance delay for Flybe’s woes
Stobart Group is contributing up to £9 million as part of the rescue deal for Flybe.
The troubled airline was bailed out by the Government earlier this week following an agreement with Flybe’s owner Connect Airways, a consortium which includes Stobart, Virgin Atlantic and Cyrus Capital.
In a London stock exchange update, Stobart said the turnaround plan for the regional airline was impacted by a ‘delay in receiving control’ of the business.
"Though the consortium announced its intention to acquire the assets of Flybe in January 2019, it did not receive merger control clearance from the European Commission for its acquisition of Flybe until 5 July 2019," it said.
"The delay in receiving control, coupled with a number of other factors including legacy issues, impacted on the delivery of the Consortium’s turnaround plan for Flybe. This resulted in a situation in which a further injection of funds is required to ensure continued flying."
As part of the rescue bid, it is believed the UK Government agreed to give the airline an extension to pay its Air Passenger Duty bill of just over £100 million.
Stobart aid the Government also agreed a ‘review of regional connectivity’ to enhance the viability of domestic UK flights.
The Government said it would review APD for domestic flights in the March Budget.
The rescue deal has been fiercely criticised by several rivals of Flybe, including British Airways’ parent International Airlines Group (IAG), easyJet and Ryanair.
IAG has filed a complaint against the European Commission claiming the deal breaches state aid rules.
Ryanair has written to Sajid Javid, chancellor of the exchequer, demanding that he extends the APD eco tax ‘holiday’ given to Flybe to all its rivals, including Ryanair, easyJet and BA.
"Otherwise this government subsidy to the billionaire owners of Flybe will be in breach of competition law and state aid rules," it said.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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