Flybe reports results, provides update on turnaround plans

UK airline Flybe Group plc announced today that its results for the year to 31 March 2013, although disappointing, are in line with market expectations and are due to lower passenger numbers and higher fuel costs, as well as US Dollar denominated costs and in regulated areas such as airport charges and air navigation fees.

The Exeter based airline reported a loss before tax, restructuring and surplus capacity costs of £23.2 for its fiscal year 2012/2013, a decline from the loss of £7.1m in 2011/2012.

Flybe also said it has taking action to turn its business around and bring it back to profitability. It has implemented a package of measures that includes a 20% reduction in its UK employee numbers and an agreement in principle for up to a 5% reduction in pilot’s salaries in return for extra time off.

The airline’s turnaround plans are being financed by the transfer of 25 pairs of arrival and departure slots at London Gatwick Airport to easyJet for a total consideration £20m, which is subject to a simple majority shareholder approval. Flybe said over 54% of its shareholders have given irrevocable approval to the transaction. The company has also deferred the delivery of 16 Embraer E175 (E-series regional jet) aircraft, which will reportedly save £20m of cash outflow for pre-delivery payments in winter 2013/14. Various other minor assets minor assets, largely surplus inventory, in both the UK airline and MRO businesses, are also to be sold by the company, it stated.

Jim French CBE, Flybe’s chairman and chief executive Officer, commented: “Flybe has exceeded its target of taking out £25m from its cost base during 2013/14 and will deliver around £40m in savings in this current financial year, expected to rise to £50m annualised savings from 2014/15 onwards. In the last few months we have streamlined the business, reducing UK-based headcount by more than 20%. We have also made major progress in reducing the cost of our supplier base.”