UK regional airline, Flybe, has been granted a lifeline, again. UK Transport Secretary Grant Shapps, Business Secretary Andrea Leadsom and Chancellor Sajid Javid have signed off on the deal that will keep Flybe operating. Flybe, now owned by the Connect Airways consortium, comprised of Virgin Atlantic, Stobart and Cyrus Capital, went cap in hand to the UK government yesterday seeking relief from a £100 million air passenger duty (APD) bill it was struggling to pay.
Leadsom confirmed the new deal last night, which includes a short-term deferral of some of Flybe’s APD bill, a potential government loan and a further cash injection from the airline’s owners, according to a report in The Financial Times. The report also suggested that the government is considering cutting the cost of APD on domestic flights across the industry, a change that may be announced in the March UK Budget.
The deal has not been positively received by others in the industry, however, namely the CEO of IAG, which owns British Airways.
In a letter to the Shapps, IAG CEO Willie Walsh, the chief executive of the owner of British Airways, described the deal as a “blatant misuse of public funds”, saying the public tax payer should not “pick up the tab” for Flybe’s owners “mismanagement of the airline”. He added that the owners, Virgin and Delta, have the resources to rescue Flybe, and as such the airline should not be asking for taxpayer support.
Leadsom defended the government’s decision, describing Flybe as a "viable business" and in a different scenario to Thomas Cook, which closed last year, "The difference... between Flybe and Thomas Cook was that in the case of Thomas Cook it had huge amounts of debt, and any taxpayer's money would simply be throwing good money after bad,” she said.
Lucien Farrell, the chairman of Connect Airways, said the group had agreed to "keep Flybe flying with additional funding alongside government initiatives".
"We are very encouraged with recent developments, especially the government's recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity," he said.
Meanwhile, the World Economic Forum has released its annual Global Risks Report, which surveyed over 750 global experts and decision-makers who were asked to rank their biggest risks. This year the report highlights issues related to climate change. The most highly rank risks relate to extreme weather events with major damage to property, infrastructure and loss of human life, with a failure of climate-change mitigation and adaptation by governments and businesses. Human-made environmental damage and disasters, including environmental crime, such as oil spills, and radioactive contamination, along with major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries. Major natural disasters such as earthquakes, tsunamis, volcanic eruptions, and geomagnetic storms are also in the top five risks.
The report, which is produced by the WEF in partnership with Marsh & McLennan and Zurich Insurance Group, calls for enhanced collaboration between world leaders, businesses and policy-makers to stop severe threats to the climate, environment, public health and technology systems. It further calls for a multi-stakeholder approach to mitigating risk at a time when the world cannot wait for the fog of geopolitical disorder to lift.
John Drzik, Chairman, Marsh & McLennan Insights, said: “There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility. Scientific advances mean that climate risks can now be modeled with greater accuracy and incorporated into risk management and business plans. High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges.”
The report can be accessed here: https://www.weforum.org/reports/the-global-risks-report-2020