Business Flybe: Ryanair's Michael O'Leary threatens rescue legal action

Flybe: Ryanair’s Michael O’Leary threatens rescue legal action

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EPA

The Ryanair chief has threatened legal action for government assistance given to the regional airline Flybe.

Michael O’Leary wrote a heavily drafted letter to the chancellor, Sajid Javid, saying that Flybe’s state bailout contravenes competition rules.

He argues that the measures being implemented to help Flybe should be extended to other airlines.

If they are not, Ryanair intends to initiate legal proceedings against the government, O’Leary said.

The owner of British Airways, IAG, has already filed a complaint with the EU, arguing that the rescue violates state aid rules.

Earlier this week, the government approved aid for Flybe, which is believed to focus on giving the airline additional time to pay around £ 100 million of pending air passenger rights (APD).

The details of the rescue plan have not been made public, however, the government has said that it fully complies with state aid regulations.

O’Leary’s letter describes the rescue as a “badly thought out rescue of an airline with chronic losses” and asks that any tax exemption granted to Flybe be extended to rival operators.

“Unlike Flybe, we all operate profitable business models (without the benefit of being owned by billionaires),” says the letter: “We must be treated in the same way as Flybe so that there is fair competition.”

Flybe owners include Virgin Atlantic from Richard Branson, Stobart Group and Cyrus Capital, who have agreed to invest £ 30 million in the airline.

Stobart Group said it will provide £ 9 million of capital “with funds withdrawn only if necessary.”

HMRC has indicated in a tweet that what is described as a “tax exemption” for Flybe is available to other companies that have problems.

“Payment time agreements are common when taxes or duties are due,” he said. HMRC said last year that more than 700,000 of those arrangements were used.

‘Lack of transparency’

Ryanair’s letter said the government should clarify what support is being given to Flybe, including the details of any “APD holiday.”

“If you do not confirm these facts within the next seven-day period, keep in mind that Ryanair intends to initiate proceedings against your government for breach of the competition law of the United Kingdom and the EU and state aid rules,” he said the letter.

IAG has also written to the government accusing it of “lack of transparency” and has submitted a request for Freedom of Information on the details of the rescue.

The government has said it will review APD as part of a government commitment to improve regional connectivity throughout the United Kingdom. He intends to make a new announcement in the Budget in March.

A railroad industry agency and environmental lobbyists have expressed concern that reducing flight taxes provided the wrong incentives at a time when the government also aims to reduce carbon emissions to cope with the crisis. Climate

The Department of Transportation said the result “would benefit the entire industry.”

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