LONDON (Reuters) – Willie Walsh, head of the British Airways parent company, has attacked a government-backed rescue of regional UK airline Flybe, calling it a blatant misuse of public funds.
Flybe was rescued on Tuesday after its shareholders agreed to invest more money while the government provided support, reported to involve the deferral of a tax bill.
Walsh, chief executive of British Airways-owner IAG <ICAG.L> and one of the biggest names in the industry, criticized the government support for a privately-held company, saying the taxpayer was picking up the tab for mismanagement of the airline.
“This is a blatant misuse of public funds,” he said in an emailed statement.
Walsh and other critics of the Flybe bail-out pointed to the fact that the carrier’s ultimate owners surely had deep enough pockets to ensure the airline’s survival without government help.
British Airways competes against Flybe on some routes and Flybe is owned by a group which includes long term BA rival Virgin Atlantic, plus Stobart Group <STOB.L> and investment adviser Cyrus Capital.
Virgin Atlantic is 51% owned by Richard Branson’s Virgin Group with the balance held by another BA rival, Delta <DAL.N>, the second biggest U.S. airline by passenger numbers with a market capitalization of $40 billion.
Under pressure to deliver on an election promise to help improve transport links outside London, the government agreed to help Flybe, in contrast to a similar test last September when it took no action to help save the much larger travel company Thomas Cook.
Flybe connects smaller UK cities such as Southampton and Newcastle and its network of routes includes more than half of UK domestic flights outside London.
Walsh has also written a letter to Transport Minister Grant Shapps, said the BBC, outlining his concerns about the Flybe deal.
(Reporting by Sarah Young; editing by Kate Holton)