Flybe in talks with govt about loan -BBC

LONDON, Jan 17 (Reuters) - Struggling British regional
airline Flybe is in talks with the government about a loan on
commercial terms which would not represent a bailout, reported
the BBC.

Rival airlines British Airways and Ryanair
have attacked a government-backed support plan for Flybe,
complaining that it prevents a level playing field and breaches
state aid rules.

But Flybe's boss Mark Anderson told staff any government
help would be made on commercial terms, according to a BBC
report, citing seen an address given by Anderson to Flybe staff.

"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," the BBC
quoted Anderson as saying.

Flybe could not immediately be reached on Friday to confirm
his comments.

The government has said that its support for Flybe does not
breach EU rules on state aid.

Flybe, which provides links between many regional UK and
European airports, was rescued from near collapse on Tuesday,
when its shareholders agreed to invest more money alongside a UK
government support plan.

Details of that government support have not been made
public. Media reports say it involves the deferral of a
passenger tax (APD) bill and a potential government loan.

Flybe is owned by Connect Airways, a consortium created by
Virgin Atlantic, Stobart Group and investment adviser
Cyrus Capital. They bought the struggling airline last year and
have already provided it with 110 million pounds ($144 million)
of funding.

But the airline's losses were such that the new funding was
used up quickly, Anderson is reported to have said.

"Three-quarters of the money the shareholders invested was
gone before we even really started. That has hurt this business
and more money is needed," Anderson is quoted by the BBC as
saying.

But he tried to reassure staff about Flybe's future.

"We are not making millions of profit at the moment but if
we stick to the plan, and what we have to do, we will," he said.

UK Infrastructure company Stobart said on Thursday it was
providing 9 million pounds of funding for Flybe as part of this
week's government-backed deal.
($1 = 0.7645 pounds)
(Reporting by Sarah Young, Editing by Paul Sandle)