Britain’s government pledges to review taxes while shareholders increase investments to keep Flybe operational

on Jan 15, 2020
Updated: Mar 11, 2020
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  • Britain's finance minister pledges to review the regional connectivity and air passenger duty.
  • Flybe's shareholders promise to increase investment in Flybe to keep it operational.
  • Connect Airways purchased Flybe in January 2019 for £2.8 million.
  • The tax relief is likely to prevent the company from collapsing.

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The British airline, Flybe, was previously reported to be under financial pressure due to the taxes levied on the industry. As of Tuesday, however, the British government has stepped up to rescue the regional airline as it pledged to review the taxes. The shareholders, following the government’s move, have also promised to enhance their investments that are direct at avoiding a cash crunch.

The government’s announcement came at just the right time since the company’s report in the past week had suggested a dire need of additional funds in order to support operations during the winter months that are known to be soft for business.

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Britain’s Finance Minister Promised To Review Air Passenger Duty (APD)

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Following his meeting with the shareholders, Britain’s finance minister, Sajid Javid, announced his plan of thoroughly reviewing the country’s regional connectivity as well as the air passenger duty (APD) currently applicable to the airline. In his statement, the finance minister commented:

“I welcome Flybe’s confirmation that they will continue to operate as normal, safeguarding jobs in the UK and ensuring flights continue to serve communities across the whole of the UK. The reviews we are announcing today will ensure that regional connections not only continue but flourish in the years to come.”

Flybe flight schedule and other operations remained as usual on Tuesday.

In a previous statement, PM Johnson had appreciated the role that Flybe plays in maintaining the country’s transport links. The government, he added, is willing to support the carrier in any way possible.

Flybe’s spokesperson expressed gratitude for the way discussions have proceeded. The agreement also entails the company’s shareholders expanding their investments by tens of millions of pounds to provide the required financial support to the airline.

Connect Airways Purchased Flybe In January 2019 For £2.8 million

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Towards the end of 2018, Virgin Atlantic in partnership with the Cyrus Capital and Stobart Group had formed a consortium by the name of Connect Airways. In January 2019, Connect Airways purchased Flybe for £2.8 million. The regional airline currently employs around 2,000 workers with a fleet comprising 68 aircraft. Flybe is to be rebranded as Virgin Connect in the upcoming months.

Connect Airways chairman, Lucien Farrell, commented on the government announcement and expressed confidence and appreciation for its plans of supporting regional connectivity while possibly reducing the taxes levied on the company. He highlighted the imperative role that the government played in raising additional funding for the airlines’ operations by its shareholders.

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