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BA boss Willie Walsh calls Flybe bailout a ‘blatant misuse of public funds’

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·Finance and news reporter
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This picture shows a Dash 8 Q400 of Flybe airline during take-off on September 24, 2019 at the airport in Duesseldorf, western Germany. (Photo by INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images)
Business secretary Andrea Leadsom said that the UK government had reached an agreement with Flybe shareholders to keep the company operating. Photo: Ina Fassbender/AFP via Getty Images

Willie Walsh, the CEO of British Airways-owner IAG (IAG.L), on Wednesday blasted the government’s decision to rescue regional airline Flybe, calling the move a “blatant misuse of public funds.”

Ministers on Tuesday evening announced a bailout that could end up being worth more than £100m ($130m) for Flybe, saving more than 2,000 jobs.

The government is still in negotiations regarding the possibility of giving the airline an extension on unpaid air passenger duties thought to be worth more than £100m.

But business secretary Andrea Leadsom said that the government had reached an agreement with shareholders to keep the company operating.

Walsh said that the consortium that owns Flybe wanted taxpayers “to pick up the tab for their mismanagement of the airline,” branding it “a blatant misuse of public funds.”

In February 2019, the consortium, Connect Airways, completed the purchase of the assets and operations of Flybe for £2.8m.

The consortium is owned by Virgin Atlantic, Stobart Aviation, and Cyrus Capital Partners. Virgin Atlantic is 49% owned by US airline Delta.

Walsh pointed out that prior to the acquisition by Connect Airways, Flybe had argued that taxpayers should subsidise regional routes.

Transport secretary Grant Shapps said on Tuesday that the government would undertake an urgent review of how it could “level up the country by strengthening regional connectivity.”

But Walsh slammed the government’s decision to bail out the airline, pointing to its shaky financial situation and its previous promises to expand regional flights.

“Flybe’s precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built,” said Walsh.

The British Airline Pilots’ Association (Balpa) on Tuesday welcomed the bailout decision, calling it “good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe.”

“The government is to be applauded for stepping up to the plate to help one of the few remaining independent UK airlines and a vital one at that,” it said.

IAG said last week that Walsh will later this year retire as CEO of the group, which was formed by the merger of British Airways and Spanish airline Iberia in 2010.

Walsh, a former British Airways and Aer Lingus CEO, will be replaced by Iberia’s current boss, Luis Gallego. Gallego’s replacement at the Spanish flag carrier airline will be announced “in due course.”

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