A six month wait to receive clearance from Brussels for the takeover of Flybe has been partly blamed for the airline being forced to the brink of bankruptcy.
Stobart Group – one of the three shareholders involved in the Connect Airways consortium alongside Virgin Atlantic and Cyrus Capital – made the disclosure after the government stepped in with a rescue plan for Flybe.
Athough Connect Airways announced its intention to acquire the assets of Flybe in January 2019, it did not receive merger control clearance from the European Commission until July 5.
“The delay in receiving control, coupled with a number of other factors including legacy issues, impacted on the delivery of the consortium’s turnaround plan for Flybe,” Stobart revealed.
“This resulted in a situation in which a further injection of funds is required to ensure continued flying.”
The shareholder consortium has to date provided £110 million to Connect Airways.
Southend airport owner Stobart Group has invested £45 million through a combination of cash and the sale of regional airline Stobart Air and aircraft leasing business, Propius.
In an update on its investment, Stobart said: “The Connect Airways consortium has worked tirelessly alongside Flybe and the UK government to look for solutions to ensure the financial viability of the airline so that consumers can continue to have confidence in flying with Flybe.”
As a result, the government agreed to review both Air Passenger Duty, with an update due at the March budget, and regional flight connectivity.
The Connect Airways consortium also committed to providing Flybe unspecified further short-term funding with Stobart Group confirming it is contributing up to £9 million.
Stobart sees its involvement as supporting growth at Southend airport with Flybe planning to introduce ten routes from this summer attracting around 500,000 extra passengers a year.
“The combination of Flybe with Stobart Air and Propius provides the opportunity to establish a compelling proposition with a comprehensive regional network in the UK and Ireland while enabling Stobart Group to concentrate on its strategic focus for developing airport and aviation services assets,” the company added.
The Treasury was notified of Flybe’s difficulties on Saturday “and since then we have worked intensively with the company to understand their financial position and explore options,” according to transport secretary Grant Shapps.
The budget airline rivals both attacked the plan to defer some of Flybe’s Air Passenger Duty payments, worth more than £100 million.
IAG has filed a complaint with the EU over the government’s rescue proposal for the regional carrier with chief executive Willie Walsh condemning the deal as a “blatant misuse” of public funds.
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