Flybe to open new bases despite half-year losses

Flybe to open new bases despite half-year lossesFlybe is opening a new base for two Q400 aircraft at Bournemouth airport and also starting flying from Stansted from March 2015.

A base is also being re-established at Aberdeen airport with four aircraft.

A new three-year agreement with Manchester Airports Group was also confirmed today. This provides “cost certainty and a competitive cost structure” at Manchester airport, Flybe’s second largest base.

The deal also locks-in “similarly advantageous” cost certainty for ongoing operations at East Midlands airport and includes Stansted and Bournemouth airports.

Details of new routes were not disclosed but the regional airline said the move into Bournemouth “builds on Flybe’s already strong presence along England’s south coast”.

The carrier said “limited operations” would be run from Stansted “with a focus on giving the regional leisure passenger cost effective access into London.”

The move into Stansted follows Flybe starting services from London City airport last month.

“Airport groups have been early to recognise our transformed business and we have been approached by various groups from across Europe to consider them as new bases,” the airline said as it revealed a half-year pre-tax loss of £15.3 million.

“They recognise the passenger volume we can bring to their region or the connecting passengers we can provide for their flag carriers.

“We remain rigorous in our assessment of the commercial opportunities presented and will only open new bases in the future if the appropriate commercial terms can be agreed and the value proposition for Flybe is clear. Building on our strong UK position is our priority in the short-term.”

Flybe, which has cut routes and jobs as part of a financial turn-around plan, said it was on course to deliver £24 million in full year cost savings after cutting UK capacity by 16.4% by removing unprofitable routes and bases. The airline operates 96 aircraft.

It revealed the sale of its 60% share in its loss-making Flybe Finland arm to joint venture partner Finnair for just €1.

Chief executive Saad Hammad said: “Our UK business performed well in the first half of the year showing the strength of the new Flybe. We delivered an increased adjusted profit before tax in the Flybe UK business and importantly became cash generative.

“Though our business transformation is far from complete, we are seeing the benefits of improved commercial execution with the right cost base and we now have improved operational and financial disciplines throughout our organisation.

“We are making significant progress in addressing the legacy issues within the business, which will ensure we operate with a simpler business model.

“We have taken decisive action in removing the overhang of the outstanding $750 million order for 20 unwanted E175 aircraft, withdrawing from the Finland joint venture as well as providing for the potential costs for the arbitrary EU 261 regulation for flight delay claims in Flybe UK. We are working hard to resolve our surplus fleet issue.

“We are undertaking a measured approach to growth in the second half with our launch of new routes to and from London City Airport.

“In addition, today we have announced that we will be opening new bases in Bournemouth and Aberdeen.

“Whilst there are still a number of challenges ahead, Flybe enters the winter season with solid momentum in its core UK business.”

The UK operations saw revenue decline by 9.1% to £284.9 million in the six months to September 30 as a result of the route network and base restructuring completed in the last financial year. Passenger revenue per seat grew by 8.7% to £54.75.

Sourced from Travel Weekly


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