Ryanair’s chief wrote a letter to Chancellor Sajid Javid demanding a tax exemption for all airlines operating in the United Kingdom after Flybe was saved from collapse on Tuesday night. Speaking to Sky News, he said: “It’s a cover-up. It’s a cover-up so they can rescue a couple of billionaires, Richard Branson, Delta Airlines and this US venture capital company who claim to have invested £ 110 million in Flybe 12 months ago, but now they are only contributing £ 30 million, they will only keep Flybe running until March and then return to the same again.
“Flybe goes bankrupt again.”
The Ryanair CEO has said that a “subsidy” from the Government for Flybe “cannot comply with competition and state aid laws,” and asked Foreign Minister Sajid Javid to extend the tax exemption granted to the airline with business problems and Ryanair rivals such as EasyJet and British Airways.
Threatening legal action, Mr. O’Leary wrote to the Chancellor that “he intends to initiate proceedings against his government for breach of the competition law of the United Kingdom and the EU, and for breach of state aid rules.”
Flybe was saved from the collapse on Tuesday night after an agreement between the Government and the owner of Flybe, Connect Airways, a consortium that includes Stobart, Virgin Atlantic and Cyrus Capital.
Stobart Group said in a London stock exchange update that the Connect Airways response plan for Flybe was affected by a “delay in receiving control” of the business.
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Connect Airways, in which Stobart owns a 30% stake, announced its intention to acquire Flybe’s assets in January last year, but only received the merger authorization from the European Commission on July 5, he said.
Stobart Group said: “This resulted in a situation in which a greater injection of funds is required to ensure a continuous flight.”
The firm said it contributed to the injection of cash after “working tirelessly together with Flybe and the United Kingdom Government” to find solutions that make the business more financially viable.
The Government agreed during the talks that it will review the implementation of the Airline Passenger Service (APD), with the intention of providing an additional update at the time of the March Budget.
It was also reported that the Government agreed to defer the APD bill of 106 million pounds of Flybe until after winter.
The details of the agreement have not been disclosed by the Government and Foreign Minister Sajid Javid said the shareholders were persuaded by the proposals to review the tax.
Stobart also said the government agreed to a “regional connectivity review” to improve the viability of national flights in the United Kingdom.
Stobart Group, which also owns London Southend airport, said its recent cash increase adds up to £ 45 million that the company has already contributed to Flybe, out of a total of £ 110 million of funds from the Connect consortium.
Tuesday’s rescue deal faced bitter criticism from airline rivals, including the owner of British Airways International Airlines Group (IAG).
IAG filed a complaint with the European Commission on Wednesday, claiming that the rescue agreement for Flybe violated state aid rules and gives the airline in distress an unfair advantage.
Since then, Downing Street has insisted that “there has been no state aid for Flybe” and that any support provided to the company would be “strictly commercial.”