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No, it’s not Mr. Anderson, it really won’t be

Summary:
A claim here that can be rejected out of hand:Flybe has requested a £100m loan from the Government in the latest twist in its bid for survival. The appeal, first reported by the Financial Times, comes amid a war of words between Flybe, the Government and rival airlines over the extent of government support afforded to the perennially loss-making airline.Boss Mark Anderson has hit out at suggestions of a Flybe “bailout”. He says any loan from the state would be on commercial terms.Such a loan will not be on commercial terms. Commercial terms here meaning at a level of interest commensurate with the risks of the loan not being repaid.Walk though the logic with us here. Why is FlyBe even asking for a government loan? Because it cannot find the money it needs in the commercial baking world at

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A claim here that can be rejected out of hand:

Flybe has requested a £100m loan from the Government in the latest twist in its bid for survival.

The appeal, first reported by the Financial Times, comes amid a war of words between Flybe, the Government and rival airlines over the extent of government support afforded to the perennially loss-making airline.

Boss Mark Anderson has hit out at suggestions of a Flybe “bailout”. He says any loan from the state would be on commercial terms.

Such a loan will not be on commercial terms. Commercial terms here meaning at a level of interest commensurate with the risks of the loan not being repaid.

Walk though the logic with us here. Why is FlyBe even asking for a government loan? Because it cannot find the money it needs in the commercial baking world at a price it is willing to pay. If it could find that money from willing bankers then it would not be asking the government. The very fact that it is so asking is all the proof we need that it’s not a loan on commercial terms.

Hey, it might even be true that it can find a commercial loan but at what it regards as a high price. The request to government being, they think, something that will produce a lower price. But that very lower price they think they might get is the proof that it’s not on commercial terms, isn’t it?

If it were a fully commercial price then there wouldn’t even be the request to government. Therefore it’s not at a fully commercial price, is it?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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