The Government is “working very hard to do what we can” to save airline Flybe, Boris Johnson has said.
But the British Prime Minister warned there are “limits” to what a government is allowed to do to help individual companies.
Chancellor Sajid Javid will hold talks with the business and transport secretaries to discuss if the loss-making regional carrier can defer paying this year’s estimated air passenger duty (APD) bill of £106m (€123.8m) for three years or whether the tax should be cut for all domestic flights, according to multiple reports.
Airlines claim APD restricts connectivity and passenger growth.
Passengers on domestic flights pay £26 (€30) in APD for a return trip, with higher rates for longer flights and premium cabins.
The tax is expected to be worth £3.7bn (€4.3bn) to the Treasury in 2019/20.
If Flybe collapses, it would be the second UK airline to fail in four months, after Thomas Cook went bust in September.
Asked if he intends to save Flybe, Mr Johnson told the BBC: “It’s not for Government to step in and save companies that simply run into trouble.
“But be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.
“It’s very important, for instance, where I was yesterday in Northern Ireland, and we’re working very hard.
“I can’t go into commercially confidential discussions.
“We’re working very hard to do what we can, but obviously people will understand that there are limits, commercially, to what a government can do to rescue any particular firm.
“But what we will do is ensure that we have the regional connectivity that this country needs.”
Shadow chancellor John McDonnell claimed “bailing out a company through a tax cut across the industry is not the way forward”.
He went on: “Working with the company and unions, the Government should look at targeted assistance to support routes judged on economic, environmental and social grounds.”
Flybe continues to provide great service and connectivity for our customers while ensuring they can continue to travel as planned. We don’t comment on rumour or speculation.— Flybe ✈ (@flybe) January 12, 2020
Flybe was bought by a consortium consisting of Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019 following poor financial results.
The consortium, known as Connect Airways, paid just £2.2 million for Flybe’s assets but pledged to inject cash into the airline to turn it around.
The holding of rescue talks with the Government over the weekend indicates the financing requirements have become greater than expected.
The airline is Europe’s largest regional carrier, flying around nine million passengers a year to 170 destinations across the continent.
It has a major presence at UK airports such as Aberdeen, Belfast City, Manchester and Southampton.
The airline began as Jersey European Airways in 1979, operating regional flights from Jersey.
Its route network grew and it was rebranded British European in 2000, before becoming Flybe in 2002.