* Flybe shareholders put more money into company
* Government promises reviews of flight tax and regions
* Green campaigners oppose cuts to air passenger duty
(Writes through, adds detail and quotes)
By Sarah Young and Alistair Smout
LONDON, Jan 14 (Reuters) - Regional airline Flybe was
rescued on Tuesday after the British government promised to
review taxation of the industry and shareholders pledged more
money to prevent its collapse.
The agreement comes a day after the emergence of reports
suggesting it needed to raise new funds to survive through its
quieter winter months.
After crunch talks with shareholders, Britain's finance
ministry said that it would review both air passenger duty (APD)
and Britain's regional connectivity as part of the plan.
"I welcome Flybe’s confirmation that they will continue to
operate as normal, safeguarding jobs in the UK and ensuring
flights continue to serve communities across the whole of the
UK," finance minister Sajid Javid said in a statement.
"The reviews we are announcing today ... will ensure that
regional connections not only continue but flourish in the years
to come."
Flights operated as normal on Tuesday.
Prime Minister Boris Johnson had said earlier that Flybe was
important for Britain's transport links and that the government
would do what it could to help the carrier.
Flybe said it was delighted with how the discussions had
gone.
"This is a positive outcome for the UK and will allow us to
focus on delivering for our customers and planning for the
future," Chief Executive Mark Anderson said.
Under the agreement, the Flybe shareholders agreed to put in
tens of millions of pounds to keep the airline running.
Flybe, which has 68 aircraft and about 2,000 staff, was
bought last year by Connect Airways, a consortium created by
Virgin Atlantic, Stobart Group and investment adviser
Cyrus Capital.
Lucien Farrell, Chairman of Connect Airways, said that it
was "very encouraged" by the government's planned reviews and
desire to strengthen regional connectivity.
"As a result, the shareholder consortium has committed to
keep Flybe flying with additional funding alongside government
initiatives," he said in a statement.
Last September travel company Thomas Cook entered
liquidation after it failed to agree a rescue plan in last-ditch
talks with its lenders and the government.
DISPROPORTIONATE HARM
The aviation industry has long opposed APD, a tax of at
least 13 pounds levied on passengers departing from UK airports,
which raised about 3.7 billion pounds for the government in
2018/19.
Flybe has said that its business is disproportionately
harmed by the tax. The airline says the tax makes its flights
more expensive than rail and road alternatives because
passengers travelling on return flights within the UK will pay
it twice.
Greenpeace and other environmental groups, however, reacted
angrily to suggestions that the government could help to
encourage flying.
"The government cannot claim to be a global leader on
tackling the climate emergency one day, then making the most
carbon-intensive kind of travel cheaper the next," said
Greenpeace chief scientist Doug Parr.
The government said it remains committed to net zero
emissions by 2050 as it reviewed the tax ahead of a budget
scheduled for March 11.
Rumours about the possible demise of Flybe had heaped
pressure on Johnson's newly elected government. In December, his
Conservative party won seats across regions served by Flybe,
helped by a promise to improve transport links outside London.
Flybe's network of routes includes more than half of UK
domestic flights outside London. Based in Exeter in the south
west of England, it carries eight million passengers a year
between 71 airports in the United Kingdom and Europe.
(Reporting by Sarah Young and Alistair Smout
Editing by Kate Holton, Mark Potter and David Goodman)
