Flybe: Ministers draft in restructuring advisers on rescue loan talks amid ‘state aid’ row
Ministers have brought in advisers to help negotiate a government loan to struggling regional airline Flybe, despite insisting the rescue deal will not constitute state aid.
Alvarez & Marsal (A&M) has been tasked with advising the Department for Transport (DfT) in assessing the basis for a commercial loan, according to Sky News.
The company, a specialist in corporate restructurings, was involved in talks between Flybe and Whitehall officials last week.
Any loan is expected to come to more than £100m.
It comes after Flybe implored regional airports to give it more time to find millions of pounds it owes them in unpaid landing fees last week.
Europe’s biggest regional airline held crisis talks with airports including Birmingham, Glasgow, Aberdeen and Southampton.
This is despite the government deferring a £10m air passenger duty (ABD) tax bill earlier this month – on top of the £100m loan – to help keep the airline afloat.
Sources told the Sunday Telegraph that Flybe, which is backed by billionaire Sir Richard Branson, had “got out it’s begging bowl”.
The government’s decision to help Flybe enraged rivals including Ryanair and British Airways earlier this month.
British Airways owner International Airlines Group filed an official complaint to the European Commission, suggesting Flybe had received unfair state aid.
IAG boss Willie Walsh also said the rescue was “a blatant misuse of public funds”.
Meanwhile, Ryanair boss Michael O’Leary threatened to sue the government over deferring the APD tax bill.
He demanded the “tax holiday” be extended to the rest of the industry.
But chancellor Sajid Javid last week dismissed the complaints.
He said the agreement to delay the APD payment was a “standard Time to Pay arrangement… because of their short-term difficulties”.
CityAM has contacted the DfT for comment.