IAG lodges complaint with EU over Flybe rescue

British Airways owner IAG has complained to the European Union about the UK government’s decision to rescue struggling regional carrier Flybe.

The complaint was sent Wednesday morning, shortly after the government stepped in to rescue Exeter-based Flybe on Tuesday evening. Terms were not disclosed, but the deal is understood to include a potential £100.0m loan, alongside or in place of a possible short-term deferral of a £106.0m air passenger duty (APD) bill, and a pledge to review taxes on domestic flights.

The deal was signed off by transport secretary Grant Shapps, business secretary Andrea Leadsom and the chancellor Sajid Javid.

But IAG – which also owns Aer Lingus and Iberia – believes the deal contravene Brussel’s state aid rules. A spokesperson confirmed: “IAG has submitted a complaint to the EU Competition directorate this morning about the state aid that the UK government has granted to Flybe.” They did not provide further details.

However, the complaint follows a letter sent by Willie Walsh, IAG’s outgoing chief executive, to Shapps. According to the BBC, which saw the letter, Walsh accused Flybe’s owners of wanting the taxpayer “to pick up the tab for their mismanagement”, and called it a “blatant misuse of public funds”.

Flybe – Europe’s biggest regional airline – was acquired last month by a consortium including Virgin Atlantic, Cyrus Capital and Stobart Group. It was due to be renamed Virgin Connect later this year. Virgin Atlantic is part owned by Delta, one of the US’s biggest airlines.

Walsh’s criticism have been echoed by rivals, with easyJet chief executive Johan Lundgren noting: “Taxpayers should not be used to bail out individual companies, especially when they are backed by well-funded businesses.”

Meanwhile, climate change campaigners were also highly critical of the pledge to review APD.

Shapps told the BBC that the rescue package was necessary to protect key routes. “The actions we have taken will support and enhance regional connectively across the UK, so local communities have the domestic transport connections they rely on.

“Any changes implemented as a result of our reviews of air passenger duty and regional connectivity will apply to all airlines in the competitive aviation market.”