The owner of British Airways has filed an official complaint to the European commission about the bailout of Flybe, amid growing political and industry criticism of the government’s rescue of the ailing regional carrier.

IAG has written to the directorate general for competition saying the rescue deal announced on Tuesday night by ministers, which could include a £100m loan and deferral of an outstanding tax bill, contravenes state aid rules.

Willie Walsh, the chief executive of IAG, had earlier described the deal as “a blatant misuse of public funds”.

IAG argues that taxpayers are now subsiding an airline that competes directly on BA and Aer Lingus routes, including the Manchester hub of Flybe’s biggest shareholders, Sir Richard Branson’s Virgin Atlantic and the US airline group Delta.

The European commission said it was ready to discuss the bailout and warned that any state aid should not distort competition.

Arianna Podestà, a spokeswoman, said: “As with all member states, we stand ready to discuss with the UK the compatibility and proposed public measures with the EU state aid rules.

“Any state aid intervention needs to be designed so that competition is not distorted and a level playing field is maintained.”

The IAG move came as opposition parties and rival airlines demanded transparency and attacked the government for using taxpayer money to prop up the airline, which operates almost two in five domestic UK flights and employs more than 2,000 people. It carries 8.5 million passengers a year between 56 airports across the UK and mainland Europe, and is the main airline at regional airports including Belfast, Southampton and its Exeter base.

Andy McDonald, the shadow transport secretary, said: “This is another taxpayer bailout for Richard Branson from the Tories. The government needs to come clean on the restructuring plan, which must include the trade unions, agreed as part of the deal.”

Munira Wilson, the Liberal Democrat’s transport spokesperson, said: “Boris Johnson’s decision to bail out Flybe is a misuse of taxpayers’ money to say the least. If Flybe is a failing business, then it is not the right business to run these routes.”

Other airlines also expressed dismay. Johan Lundgren, the CEO of easyJet, said: “What is clear is that taxpayers should not be used to bail out individual companies, especially when they are backed by well-funded businesses.”

Ryanair said: “We have already called for more robust and frequent stress tests on financially weak airlines and tour operators, so the taxpayer does not have to bail them out.”


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