International Airlines Share News (IAG)

(Sharecast News) - The war of words over Flybe's rescue package escalated on Friday as the regional airline denied it had received favourable treatment and competitors threatened legal action.

In the first financial disclosure of any aspect of the deal, Flybe admitted it had agreed a payment plan with the Revenue & Customs office on a debt of less than £10m as opposed to a delay on air passenger duty (APD) of £106m.

"This agreement will only last a matter of months before all taxes and duties are paid in full," Flybe said in a statement.

"This is a standard 'Time to Pay' arrangement with HMRC that any business in financial difficulties may use."

Flybe chief executive Mark Anderson on Thursday told staff the company was in discussions with the government, but described the assistance as a "loan".

"We are in conversation with the government around a financial loan - a loan, not a bailout - a commercial loan, but that is the same as any loan we'd take from any bank," he was quoted as saying in a video seen by the BBC.

"The government will not lend if they do not believe there is a credible plan. No one is going to throw good money after bad," Anderson added.

Other airlines have expressed fury over the arrangement, which agreed on Tuesday, and its apparent lack of tranparency.

Ryanair boss Michael O'Leary threatened to sue the UK over its rescue deal for Flybe, sending a letter on Thursday to Finance Minister Sajid Javid accusing the government of breaching state aid rules.

"No commercial bank would lend money to Flybe, its own billionaire shareholders won't lend them money," he told the BBC on Friday.

"So the government is stepping in here, lending them APD, which is unfair on all the other UK airlines."

O'Leary warned that the cash from Tuesday's deal would be spent by March.

"And then what?" Flybe is not a viable business, it never has been. It has lurched from reconstruction to reconstruction."

Flybe, is owned by Connect Airways, a consortium of Cyrus Capital, Stobart Group and Virgin Atlantic, which bought the struggling carrier a year ago.