15 NOVEMBER 2010
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If very well founded rumours are correct, later this week Flybe will finally announce plans for a London Stock Market floatation. It has been a long time coming.
Flybe is based at Exeter Airport, a Second World War RAF base and a grim 1970’s style operation now running at just 800,000 passengers a year. Perhaps a fairly quiet backwater is the ideal location to build up what is today the largest regional airline in Europe and Britain’s biggest domestic carrier.
Back in September the airline announced profits of £6.8m for the year to March (compared to £12.8m for the previous 12 months), a splendid effort during very difficult times. Whilst the ash problems and its after-effects will impinge on the 2010/2011 trading, clearly the board is sufficiently satisfied with the current trading and prospects to consider the launch, said to raise £200m. Over the last several years Flybe has nearly floated but each time outside events beyond its control have meant an aborted “take off”.
Flybe has announced plans for a major aircraft acquisition and made noises regarding a serious expansion in Europe.
The history of Flybe is turbulent and an interesting combination of Blackburn and Jersey interests. In the 1970s steel magnate the late Jack Walker created Spacegrand, a small charter airline, essentially to serve as his transport between Lancashire and the Channel Island tax haven. He also built Blackburn Rovers into one of the leading football clubs in the country.
In 1983 Spacegrand acquired Jersey European Airlines (JEA) which became British European in 2000 and subsequently Flybe. The Walker family interests are the largest shareholder to this day.
Jim French, Chief Executive, (57 and now a CBE) joined Flybe in 1991 after an aviation career that included long spells at Caledonian Airways and Air UK. A native of Duns he shares the same passion for motoring as another product of the Scottish farming town, the late Jim Clark.
French will probably admit that one of his better decisions was to dump a fleet of 50-seat Canadair passenger jets in 1995 for 70-seat Bombardier turboprops. Whilst a BAe 146 enthusiast to the extent of ordering the doomed Avro RJX, he was quick to realise the potential of Embraer’s E series aircraft, becoming the first to commit to the 115-seat EMB 195.
A fine relationship with British Airways resulted in another very successful and far-sighted move. BA acquired for £40m 15% of Flybe, the Exeter airline taking over the remnants of City Flyer Express and British Regional Airlines which the national carrier had purchased in a rash moment of expansion. Combining routes and different staff attitudes was accomplished virtually seamlessly, a real achievement.
On a different front one of the biggest criticisms of the UK airline industry over the last period has been a lack of leadership with APD and its appliance, a classic example of Government spotting a cash cow. It is unlikely that Lord Marshal and Sir Michael Bishop in their time would have stood still and let it happen. Downing Street would have been visited.
Let’s assume that Flybe gets its well deserved floatation under way. Emirates President Tim Clarke spoke up heartily last week at World Travel Market (WTM) focusing on the dangers of a Heathrow demise. One of the leaders of the airline business worldwide he received very little coverage. What is needed is someone in the UK to beat the drum for the air travel industry.
Jim French your time maybe cometh.
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