StockMarketWire.com – Regional airline Flybe revealed an adjusted loss before tax, restructuring and surplus capacity costs in 2012/13 of £23.2m (2011/12: loss of £7.1m). There was a reported loss before tax of £40.7m (2011/12: loss of £6.2m).Revenue under management in the year to end-March, including the full year impact of Flybe Finland, was up 15.1% to £781.5m (2011/12: £678.8m).
Total cash was £54.7m at 31 March 2013 (2012: £67.6m), and net assets of £48.1m (2012: £89.4m).
Target cost savings of £25m under Phase 1 of turnaround plan were exceeded, with £30m of annual cost savings now secured for year 2013/14 onwards.
Phase 2 of the plan is 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.
UK based head count is being reduced by more than 20%.
Agreement in principle has been reached with the British Airlines Pilots Association (‘BALPA’), for up to a 5% reduction in salary in return for extra time off.
The turnaround plan is being financed through:
® The transfer of arrival and departure slots at London Gatwick Airport (‘LGW’) to easyJet for £20m, subject to a simple majority shareholder approval; over 54% of shareholders have given their irrevocable approval to the transaction;
® The deferral of 16 Embraer E175 (E-series regional jet) aircraft deliveries, saving £20m of cash outflow for pre-delivery payments in winter 2013/14;
® The disposal of various other minor assets.
Update on ‘Delivery and Future Direction’
The actions taken so far under Phases 1 and 2 of Flybe’s turnaround plan, Delivery and Future Direction, are now expected to deliver some £40m of annual cost savings in 2013/14 (against the original target of £25m), and targeted to reach an annual savings figure of around £50m by 2014/15 onwards.
Jim French CBE, Chairman and CEO, stated:
“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 announcements on 23 May 2013 have acted as a clarion call for action and debate on the injustice of the grossly unfair ‘double hit’ nature of the APD tax on the UK regions. The plans being developed in Edinburgh, Cardiff and Belfast are aimed at reducing this burden, and bode well for our customers, the regional economies we serve and Flybe itself. We will support these developments and work closely with those seeking to bring about change.
”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.
“I would like to thank all of our employees, staff and union representatives for their hard work, support and resilience through what is proving to be a very challenging period for the business and its staff.
“Flybe remains Europe’s largest independent regional airline, flying over 200 routes from more than 100 airports across 23 countries. We have a leading brand, a strong reputation for service excellence and a standing amongst our peers that means we can, and do, undertake business with all the major airline groups in Europe. We continue to make real and measurable progress in Europe, with our contract flying business in particular being a stable, income-generating entity which is well positioned for further growth. With Flybe’s future cost base significantly improved, the business will now move to reclaim its position as Europe’s leading regional airline.”
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