Flybe chief Mark Anderson has said that the troubled airline is in talks over a government loan but insisted that any financial support would not be in the form of a bailout.
Anderson added that plans to reinvigorate the operator had started to come to fruition in January and that given time, Flybe would be making a profit and have a “great future”.
He said in a video address to staff: "We are in conversation with the government around a financial loan - a loan, not a bailout - a commercial loan, but that is the same as any loan we'd take from any bank.”
Rival airline bosses, including Ryanair’s Michael O’Leary, have called for the government to clarify the extent of support they are offering to Flybe, amid concern that what they believe to be a “bailout” is in breach of competition rules.
The government has not published the details of its rescue agreement with Flybe, but insists that it is in line with state aid rules. Up to this point, the government support being offered is believed to be in the form of deferrals on Flybe's Air Passenger Duty payments to HMRC.
Should the government now look to provide a loan, under state aid rules it would have to be short term and aimed directly at rescuing or restructuring the Flybe business. Alternatively, it would have to be provided on identical terms to a loan from a private lender.
Despite the vast resources of Flybe’s consortium of owners, which includes Virgin Atlantic, Anderson was defensive over the government's decision to step in, saying that the company was undergoing “legacy issues” that had not been apparent during the acquisition of the business.
Anderson said: "Our shareholders invested an awful lot of money, believing they fully understood the state of the business they'd bought. The reality… is that we were in worse shape than even the shareholders thought we were.
"We went into the summer very unresilient in terms of our operation, with a weak fleet, with a lot of gaps in terms of people flying our aircraft, with huge payments being made to people to get them to work extra hours.”
He admitted that higher costs, late flights, and having to pay out compensation to delayed passengers meant that the firm was losing money “hand over fist” for a period of time.
Anderson explained: "Three-quarters of the money the shareholders invested was gone before we even really started. That has hurt this business and more money is needed.”
However, Anderson believes that increased sales by January is an indicator that the outlook is improving, despite the setback of negative news coverage this week.
He said: "We are in a vastly different place than where we were six months ago. We are not making millions of profit at the moment but if we stick to the plan, and what we have to do, we will.
"The government would not lend if they do not believe there is a credible plan."
