Losses soar at Flybe as airline cuts jobs and pilots’ wages

LOW cost airline Flybe – the largest carrier in terms of flight volume at Manchester Airport – has seen its losses increase dramatically.
 
Announcing its preliminary results for the year to March 31, the airline, which uses Manchester as a hub for its operations, reported a loss before tax of £40.7m (2011/12: loss of £6.2m).
 
However, Flybe, which is in the middle of a restructuring process, said this is in line with expectations.
 
And revenue under management for the year was up by was up by 15.1% to £781.5m.
 
Flybe also says it is making progress with ‘Delivery and Future Direction’, the package of measures it has implemented in order to return its UK based businesses to profitability.
 
It says its target cost savings of £25m under phase 1 of the turnaround plan have been exceeded, with £30m of annual cost savings now secured for year 2013/14 onwards.
 
Phase 2 of the plan is now being implemented, targeting a further £10m of savings in 2013/14, rising to around £20m from 2014/15.  This would take total annual cost savings to some £50m from 2014/15 onwards.
 
The airline’s UK based head count is being reduced by more than 20% and Flybe says it has reached an agreement in principle with the British Airlines Pilots Association for up to a 5% reduction in salary in return for extra time off.
 
The turnaround plan is being financed in a number of ways including the
transfer of arrival and departure slots at London Gatwick Airport to easyJet for £20m, subject to a simple majority shareholder approval.
 
Jim French CBE, Flybe’s chairman and chief executive officer, said:”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.
 
”Our results for 2012/13, while expected, are nonetheless disappointing. During the year, we have taken difficult decisions as part of our turnaround plan, which have affected all our people. Challenging as they have been, these decisions were critical to ensuring the future success of Flybe.
 
“As outlined above, our turnaround plan has involved considerable efforts to reduce the cost base of the business.  Inevitably, and sadly, this process has to date involved the departure of around 490 people from the business.

“We do not underestimate the effect of these difficult decisions on those staff leaving and the friends and colleagues that they leave behind.”