Ryanair Group CEO Michael O’Leary has accused chancellor Sajid Javid of making “inaccurate and seriously misleading” statements about the government’s agreement to help struggling Flybe stay in business.
Posting an open letter to the chancellor on Ryanair’s Twitter page, O’Leary referred to a letter sent by Javid on 24 January, which said Flybe has been “given time to pay” a backlog of Air Passenger Duty (APD). He claimed the move “is in breach of state aid rules”.
The government has agreed to help regional carrier Flybe after the company was reportedly on the verge of collapse. Details of the deal have not yet been fully confirmed, but it is believed to include extra time for the airline to pay a reported £100 million in outstanding APD.
Flybe’s new owner Connect Airways, a consortium including Virgin Atlantic, Stobart Group and Cyrus Capital, has also agreed to invest £30 million in the airline.
Soon after the rescue was announced, O’Leary wrote to Javid threatening legal action if APD concessions granted to Flybe are not extended to other carriers.
In his latest letter, O’Leary challenges Javid’s comment that Flybe is like “many other businesses in the UK” because it was “bought by a group of billionaires for just £2 million last year, in the full knowledge that Flybe was a loss-making business”. He said the notion that Sir Richard Branson, Delta Air Lines, Stobart Group and Cyrus Capital need time to pay off debts “is absurd”.
O’Leary continued: “If these billionaire shareholders are not willing to put their hand in their own deep pockets to bail out the loss-making Flybe, then why is your government and HMRC giving them a bail out?”
Flybe itself has defended the deal as “a standard Time to Pay agreement with HMRC that any business in financial difficulties may use”.
He also said the notion that Flybe is a viable business that ran into short-term difficulties is unfounded because it “has lurched from failure to failure over the last 20 years, having been restructured numerous times as British European, BA Regional and later Flybe”. “What Flybe does consistently is lose money because it has a failed business model,” he added.
O’Leary is urging the government to consider a cut in APD for all airlines and passengers that use regional airports, not just Flybe.
“Ryanair and Easyjet already carry far more passengers than Flybe to/from the UK’s regional airports, including Glasgow, Edinburgh, Belfast, Bristol, Manchester and Liverpool,” he said. He claimed this competition on regional routes is why Flybe is a loss-making airline.
O’Leary’s comments come after media reports revealed the government is considering a £100 million short-term loan for the carrier, to which he responded: “If Richard Branson and his mates won’t lend £100 million to Flybe, then why should the hard-pressed British tax payer rescue them?”
Meanwhile, British Airways owner International Airlines Group (IAG) has filed a complaint with the EU over the government rescue, saying it breaches rules on state aid. Easyjet has also said tax payer money should not be used to bail out individual companies, “especially when they are backed by well-funded businesses”.
Connect Airways and Flybe have remained quiet on the situation, except to confirm that it is in talks with the government about a loan. Chief executive Mark Anderson said only that the company’s turnaround plan has already started to work.