The Ryanair chief wrote a letter to Chancellor Sajid Javid demanding a tax break for all airlines operating in the UK after Flybe was saved from collapse on Tuesday evening. Speaking to Sky News, he said: “It’s a cover-up. It’s a cover-up so they can bail out a couple of billionaires, Richard Branson, Delta Airlines and this venture capital company from America who claim to have put in £110 million into Flybe 12 months ago. But are now only putting in £30 million. It will only keep Flybe going until March and then you’re back to the same thing again.

“Flybe goes bust again.”

The Ryanair CEO has said that a Government “subsidy” for Flybe “cannot comply with competition and state aid laws”, and called on Chancellor Sajid Javid to extend the tax holiday granted to the troubled airline to Ryanair’s own business and rivals such as EasyJet and British Airways.

Threatening legal action, Mr O’Leary wrote to the Chancellor that he “intends to launch proceedings against your government for breach of UK and EU competition law, and breach of state aid rules”.

Flybe was saved from collapse on Tuesday evening following an agreement between the Government and Flybe’s owner Connect Airways, a consortium including Stobart, Virgin Atlantic and Cyrus Capital.

Stobart Group said in a London stock exchange update that the Connect Airways turnaround plan for Flybe was impacted by a “delay in receiving control” of the business.

Connect Airways, in which Stobart owns a 30% stake, announced its intention to acquire Flybe’s assets in January last year but only received merger clearance from the European Commission on July 5, it said.

Stobart Group said: “This resulted in a situation in which a further injection of funds is required to ensure continued flying.”

The firm said it contributed to the cash injection after “working tirelessly alongside Flybe and the UK Government” to look for solutions to make the business more financially viable.

The Government agreed during the talks that it will review the application of Airline Passenger Duty (APD), with the intention to provide a further update at the time of the March Budget.

It was also reported the Government agreed to defer Flybe’s £106 million APD bill until after the winter.

Details of the deal have not been disclosed by the Government and Chancellor Sajid Javid said shareholders were persuaded by proposals to review the levy.

Stobart also said the Government agreed a “review of regional connectivity” to enhance the viability of domestic UK flights.

Stobart Group, which also owns London Southend Airport, said its recent cash boost is in addition to £45 million the company has already pumped into Flybe, from a total £110 million of funding from the Connect consortium.

Tuesday’s rescue agreement has faced staunch criticism from airline rivals including British Airways owner International Airlines Group (IAG).

IAG filed a complaint European Commission on Wednesday, claiming the rescue deal for Flybe breached state aid rules and gives the struggling airline an unfair advantage.

Downing Street has since insisted there has been “no state aid to Flybe” and any support that is given to the firm would be on “strictly commercial terms”.

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