International Airlines Share News (IAG)

(Sharecast News) - Flybe is facing potential collapse after its request for a ?100.0m taxpayer loan looked set to be rejected.
Europe's largest regional carrier is now understood to be relying on a cut to air passenger duty being announced in next week's Budget if it is to escape administration.

According to reports by the Financial Times, ITV and Sky News, as it currently stands Flybe - which employs 2,000 people and is responsible for around 40% of all domestic UK flights - only has enough cash to continue until the end of March.

It first approached the government in January to secure emergency funding, and initial expectations were that it would receive both the bailout and a cut in APD.

There was disquiet about the decision, however, with environmental campaigners concerned about a potential reduction in APD, which contributes around ?3.7bn a year to the exchequer.

Some also questioned why Flybe needed bailing out, despite being owned by Connect Airways, a consortium of Virgin Atlantic, Stobart Air and hedge fund Cyrus Capital. Shortly afterwards, British Airways-owner IAG filed a complaint to the European Union about the bail out.

According to the FT, citing Whitehall sources, the airline's request for the loan did not met certain criteria set by the government. A decision on the loan was expected early in February, but has been delayed. The FT quoted a source within Flybe that said the carrier was also concerned the government was "backsliding" on its earlier commitment to reduce APD.

ITV, meanwhile, quoted a source close to the airline, who said: "The impact of Covid-19 has made a difficult situation worse." ITV said the airline had told the government was "urgent" and that it needed a decision on the loan "in the coming days".

Connect Airways, which acquired the business in March 2019, has previously indicated the business could go into administration if it does not receive a financial bailout.

Nether Flybe nor the government commented on the reports.