Flybe-9
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In the article below the Connect Airways CEO is talking about the possibility of stopping flights if the route can easily made by train or road. Unfortunately the definition of ‘easy’ is not given.
https://www.businesstraveller.com/bu...mestic-routes/
https://www.businesstraveller.com/bu...mestic-routes/
I think this comment must have been aimed at some know-nothing, possibly some government official who has seen their "Faster than road or rail" strapline on the aircraft. Route decisions are taken based on profitability and effective aircraft/resource usage, not on whether there's a good train service.
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So based on the comments from the government that they have ensured Flybe are kept going to ensure connectivity regionally around Britain, does this mean that if it falls on it's face in a year that they should bail it out again?
The department of transport need to assess what airports need essential yet technically not commercially viable routes and provide a subvention, open to all parties to access. Sadly other airlines have been dead and buried and in my opinion many were as deserving of a lifeline as Flybe is. BmiRegional, is an example, AirSouthWest through the guise of Eastern Airways... the list goes on. Is BlueIslands going to be able to gain the same advantage if a buyer cannot be found?
As fair as I can see they've blamed a fleet of 195s for there losses up to now and thrown in APD to the mix. If they've burned through the £100M as suggested on Sky news yesterday, (the injection that came last year), they in effect had funds to cover this level of liquidity. This event is about liquidity and cash flow. It's not a seasonal business per se. I just cannot see what where these losses are coming from.
The tax payer in effect is paying for this as I cannot see what way this will be repaid as this business seems unviable.
The routes that are needed as essential air services should be provided for and beyond that any other service that is loss making should be canned. Do they make a return on volume routes like BHD BHX or MAN competing with easyJet? Is there a margin on these LCC penetrated routes? Will they stay on BHX to GLA and EDI and fly at a loss when easyJet commence operations on these routes? Seems illogical.
The department of transport need to assess what airports need essential yet technically not commercially viable routes and provide a subvention, open to all parties to access. Sadly other airlines have been dead and buried and in my opinion many were as deserving of a lifeline as Flybe is. BmiRegional, is an example, AirSouthWest through the guise of Eastern Airways... the list goes on. Is BlueIslands going to be able to gain the same advantage if a buyer cannot be found?
As fair as I can see they've blamed a fleet of 195s for there losses up to now and thrown in APD to the mix. If they've burned through the £100M as suggested on Sky news yesterday, (the injection that came last year), they in effect had funds to cover this level of liquidity. This event is about liquidity and cash flow. It's not a seasonal business per se. I just cannot see what where these losses are coming from.
The tax payer in effect is paying for this as I cannot see what way this will be repaid as this business seems unviable.
The routes that are needed as essential air services should be provided for and beyond that any other service that is loss making should be canned. Do they make a return on volume routes like BHD BHX or MAN competing with easyJet? Is there a margin on these LCC penetrated routes? Will they stay on BHX to GLA and EDI and fly at a loss when easyJet commence operations on these routes? Seems illogical.
The intervention seems entirely logical to me. Gist seems to be that FlyBe will still be liable to repay the APD owed following a grace period. So no free gift. And this move allows time for the airline to be reorganised and (hopefully) saved from collapse.
And if all goes to plan, the potential payback for the state includes:
- Around 2400 FlyBe staff still in gainful employment, paying their taxes and not claiming benefits (although some redundancies may be inevitable).
- Exeter, Southampton and Belfast City Airports not pushed to the brink with all the job losses that would bring. FlyBe ops dominate these three airports in particular.
- Jobs preserved amongst airport and handling agency staff across FlyBe's other UK airports.
- Lifeline routes to IOM and Channel Islands preserved.
- Regional connectivity (essential to general business competitiveness) maintained across several more remote counties of the UK.
- Franchise partners not dragged down with the ship.
Seems to me that the UK taxpayer would be on the hook for a whole lot more if the operation was allowed to fail?
Rescue initiative sounds like good value to me. Taxpayer exposure is very low compared with the costs which would certainly be incurred in the aftermath of collapse.
And if all goes to plan, the potential payback for the state includes:
- Around 2400 FlyBe staff still in gainful employment, paying their taxes and not claiming benefits (although some redundancies may be inevitable).
- Exeter, Southampton and Belfast City Airports not pushed to the brink with all the job losses that would bring. FlyBe ops dominate these three airports in particular.
- Jobs preserved amongst airport and handling agency staff across FlyBe's other UK airports.
- Lifeline routes to IOM and Channel Islands preserved.
- Regional connectivity (essential to general business competitiveness) maintained across several more remote counties of the UK.
- Franchise partners not dragged down with the ship.
Seems to me that the UK taxpayer would be on the hook for a whole lot more if the operation was allowed to fail?
Rescue initiative sounds like good value to me. Taxpayer exposure is very low compared with the costs which would certainly be incurred in the aftermath of collapse.
I'm utterly amazed that no one has publicly asked Flybe directors to explain how they managed to hang on to around £100 million of public money - the APD tax was not theirs to keep.
Also - how did the tax authorities react to a £100 million hole in the expected income? I ask that as I have had 3 emails this month from HMRC chasing me for upaid tax. The princely sum of £40.......
Also - how did the tax authorities react to a £100 million hole in the expected income? I ask that as I have had 3 emails this month from HMRC chasing me for upaid tax. The princely sum of £40.......
If they've burned through the £100M as suggested on Sky news yesterday, (the injection that came last year), they in effect had funds to cover this level of liquidity
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If they've burned through the £100M as suggested on Sky news yesterday, (the injection that came last year), they in effect had funds to cover this level of liquidity. This event is about liquidity and cash flow. It's not a seasonal business per se. I just cannot see what where these losses are coming from.
It would appear that, on the face of things, Flybe has burned through £200m in a year. That's the £100m in unpaid APD (calculated by another poster as around 12 months' worth), plus the £100m that Virgin and friends were supposed to be putting in.
Surely losses of that degree are virtually insurmountable - unless of course the rescuers didn't stump up the cash they pledged.....
Surely losses of that degree are virtually insurmountable - unless of course the rescuers didn't stump up the cash they pledged.....
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I am glad that Flybe can be saved - not only because of the 2000 jobs at stake, but also the disaster that it would cause for the tourism industry and economy of Guernsey and other communities, as well as the knock on effect it would have on the likes of Blue Islands.
But the responsibility lies clearly in the hands of the three partners in Connect.... Virgin, Stobart and Cyrus - all three of whom seemed to be happy to pick up Flybe for peanuts and then pick the flesh off the skeleton.
As for APD, I am all in favour of that to be cancelled or completely restructured.... a Flybe Q400 with 80 pax on board for a 30 minute flight, and producing minimal carbon emissions per passenger, lands up paying twice more tax than, for example, a general aviation B747, let's say, a Saudi Royal Family flight with a dozen family members, off to Riyadh... the latter producing more carbon emissions just on take off than the whole Flybe flight !!
But a UK government hand-out ?? No way !! It will only go to the benefit of the investors in Connect and Flybe will still eventually collapse.
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It would appear that, on the face of things, Flybe has burned through £200m in a year. That's the £100m in unpaid APD (calculated by another poster as around 12 months' worth), plus the £100m that Virgin and friends were supposed to be putting in.
Surely losses of that degree are virtually insurmountable - unless of course the rescuers didn't stump up the cash they pledged.....
Surely losses of that degree are virtually insurmountable - unless of course the rescuers didn't stump up the cash they pledged.....
The Virgin/Stobart/Cyrus consortium has so far pumped in £20m working capital loan and a further view to invest £80m - it was reported before the takeover.
https://www.theguardian.com/business...led-consortium
Something happened recently that spooked the investors and was going to stop the £80m investment which seemingly now will be forthcoming following government reassurances.
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Air passenger duty is paid by passengers in advance - i.e. when they buy their tickets - the amounts collected should be remitted to the Govt via a monthly return. That actually helps the cash flow of businesses BUT it is not money an airline should use for their own business purposes; to do so to my mind is a "criminal" misuse of APD paid by a pax to Govt via the airline. If, as is being reported, BE owe £100m, someone should be held accountable. No one likes paying APD (or any taxes) but when a businesses diverts taxes to keep themselves afloat that is clearly wrong.
Business regularly defer tax payments that are supposedly paid on a monthly or yearly basis. APD will more than likely have a similar mechanism for deferment.
It could be that they deferred last years and now they are in the realisation that the business is going one way only and that deferred tax is the straw that broke the camels back!
Deferrement of taxes is not illegal by any stretch.
Trading while knowingly insolvent is!
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So a government loan is also being negotiated but not yet agreed. If the loan is agreed and APD deferred, and we end up in the same situation in a year's time, what happens then? More loans etc or a failure with bigger losses for the taxpayer? If this loan is not yet agreed, the future of Flybe is not yet secure as at least one of the owners will be thinking long and hard about whether to commit more money. I think the government has been taken for fools on this deal.
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The Virgin/Stobart/Cyrus consortium has so far pumped in £20m working capital loan and a further view to invest £80m - it was reported before the takeover.
Something happened recently that spooked the investors and was going to stop the £80m investment which seemingly now will be forthcoming following government reassurances.
Something happened recently that spooked the investors and was going to stop the £80m investment which seemingly now will be forthcoming following government reassurances.
All we know that they definitely paid is the 2.8 MIllion or so to pay 1p per share and admin costs associated with wresting control of the company away from the former shareholders.
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So a government loan is also being negotiated but not yet agreed. If the loan is agreed and APD deferred, and we end up in the same situation in a year's time, what happens then? More loans etc or a failure with bigger losses for the taxpayer? If this loan is not yet agreed, the future of Flybe is not yet secure as at least one of the owners will be thinking long and hard about whether to commit more money. I think the government has been taken for fools on this deal.
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It seems to me that the decision has been to kick the can down the road so to speak. According to Sky New (who originally broke the story) they been given a three month brake for paying the APD to HMG and then three monthly onwards instead of paying the £100 million owed. This in theory will give the company a breathing space over the quiet period until April subject of course the shareholders injecting further capital. My theory is that the government will reduce the APD on domestic flights and increase it on long haul flights to make up the difference. The APD is expected to bring in just short of £4 billion and the government needs every penny.
Looking further ahead I have grave doubts the airline will survive in its present form and the bad publicity over the last few days definitely has not helped.
Looking further ahead I have grave doubts the airline will survive in its present form and the bad publicity over the last few days definitely has not helped.
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It seems to me that the decision has been to kick the can down the road so to speak. According to Sky New (who originally broke the story) they been given a three month brake for paying the APD to HMG and then three monthly onwards instead of paying the £100 million owed. This in theory will give the company a breathing space over the quiet period until April subject of course the shareholders injecting further capital. My theory is that the government will reduce the APD on domestic flights and increase it on long haul flights to make up the difference. The APD is expected to bring in just short of £4 billion and the government needs every penny.
Looking further ahead I have grave doubts the airline will survive in its present form and the bad publicity over the last few days definitely has not helped.
Looking further ahead I have grave doubts the airline will survive in its present form and the bad publicity over the last few days definitely has not helped.
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Yes, lots have to change at Flybe but that doesn’t mean that the airline doesn’t have a future, albeit in a different size and shape. Until the details of any assistance are known it’s hard to criticise the government (on this matter). Any assistance should have the strictest of conditions attached.
If Flybe had folded this week I’m guessing they would have got zero of the outstanding APD. So by helping to keep it going, while they might not see it all either, they’ve still got an airline providing a decent level of connectivity to the regions across much of the UK. This at a fraction of the cost to them of providing road & rail infrastructure.
For too long in the UK the ordinary guys and girls have born the brunt of incompetent and greedy management (which Flybe has had in abundance for decades). Cracking down on this should be a government priority, not necessarily letting companies fold with workers losing their jobs and devastating communities.
If Flybe had folded this week I’m guessing they would have got zero of the outstanding APD. So by helping to keep it going, while they might not see it all either, they’ve still got an airline providing a decent level of connectivity to the regions across much of the UK. This at a fraction of the cost to them of providing road & rail infrastructure.
For too long in the UK the ordinary guys and girls have born the brunt of incompetent and greedy management (which Flybe has had in abundance for decades). Cracking down on this should be a government priority, not necessarily letting companies fold with workers losing their jobs and devastating communities.
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After all the best alternatives, such as they are in Britain, are available to/from and around London
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