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19 NOVEMBER 2018
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The sad saga of Flybe has now entered the dangerous phase where a company needs money but the people who would normally pay it – in this case, passengers – will hesitate in the face of uncertainty over the future to book flights unless they have to. Credit-card payments are protected but that becomes practically meaningless in the face of a collapse in confidence. Suppliers are not happy and the airline’s main investors are reported to be cutting their holdings.
Flybe shares closed at 8.9p on the LSE on Friday, valuing the company at just over £20m.
All the talk about a sale has obscured the fact the airline is looking at other options. In the words of its statement on Wednesday: "The Board of Flybe Group plc ("Flybe" or the "Company") announces today that it is undertaking a comprehensive review of the various strategic options open to it to address the current challenges facing the airline industry and maximise value for shareholders.
"These options include further capacity and cost saving measures, initiatives to strengthen the balance sheet and preserve cash resources, as well as a potential sale of the Company through the commencement of a "formal sale process".
Fingers crossed. It would be a shame to lose it. Founded 40 years ago, Flybe is the largest regional airline in Europe. It flies more UK domestic flights than any other airline – 53% of all UK flights within mainland Britain outside London. It operates 192 routes serving 14 countries from 75 departure points in the UK and Europe and is the largest scheduled airline by air traffic movements at 12 UK regional airports, including Manchester and Southampton.
Also almost totally brushed aside is the fact Flybe on Wednesday was actually announcing a profit of £14m, although sadly not one large enough for the outside watchers. And, as noted by CEO Christine Ourmières-Widener, the company, in line with declared strategy, reduced seat capacity in the first half by 9%, delivering a 7.2% increase in revenue per seat, while continued improvements were being seen into quarter three “which demonstrates the popularity of Flybe for our customers”.
In a nutshell, there is – or was – a brave fight going on, but very probably it may be seen as too little, too late.
Sentiment has little place in modern business and as possible buyers circle talk has moved on to hard-headed considerations not unconnected with Flybe’s valuable slots at its airports. EasyJet and Ryanair have been mentioned in this context, plus the Stobart Group, which bid for Flybe earlier this year but was rejected saying it was unable to reach agreement “on satisfactory terms” with Flybe (see BTN 26 March).
Stobart however is presently caught in legal matters that may divert management time. An ongoing court case between current and previous directors is likely to complete this week. BTN will report.
Watching the situation will be the other main UK regional operators, Eastern, part of the Bristow Group, and the Bond Brothers-owned Airlines Investment Group, which includes BMI Regional and Loganair.
Also not much mentioned have been the staff both in the air and at the airports involved, including Heathrow, London City and Flybe’s base at Exeter.
This was put in context by general secretary Brian Strutton of the pilots’ union Balpa, who said Flybe’s 2,300 “talented and committed” employees in the UK would have been very worried to hear on Wednesday their company was up for sale.
“Despite warnings, this will still be a bolt out of the blue,” he added. “Balpa believes that Flybe is fundamentally a sound airline and we will scrutinise any offers to buy Flybe very carefully to ensure continued employment is protected.
“We also expect to be consulted by Flybe and potential bidders over any future plans they have for the airline and its employees, and we reserve our right to express our opinion and take any other steps in order to protect our members’ interests.”
The battle, it seems, may be only just commencing.
(See 'Flybe: A crisis?' in this issue)
All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum
Howard Sanderson, Luton
Nothing new for UK aviation. The silence from government is deafening so expect zero support, unlike their rush to intervene with the North East Rail franchise or the Italian government support for Alitalia. A good excuse for Hammond to at least drop domestic APD.