Flybe in talks to sell its 25 Gatwick landing slots for up to £20 million
Flybe is in talks about selling its 25 Gatwick landing slots to raise money, as it is expected to announce a large financial loss – about £14 million – for last year. The slots could raise up to £20 million. Easyjet is one of the companies Flybe is believed to be in discussions with to sell to. Flybe was floated on the stock market at the end of 2010. Since then it has faced soaring fuel costs, falling passenger numbers and higher airport duty. It is currently axing about 10% of its 3,000-strong UK workforce to cut costs by at least £35m. It is also reviewing its network of 13 UK bases of Aberdeen, Belfast City, Birmingham, Edinburgh, Exeter, Guernsey, Glasgow, Inverness, Isle of Man, Jersey, Manchester, Newcastle and Southampton. Last week, BALPA confirmed Flybe’s pilots had agreed to a 5% pay cut to avoid compulsory redundancies. If Flybe sells all its Gatwick slots, that only leaves it a few London slots, at Luton.
Flybe in Gatwick runway slots sale talks
13 May 2013 (BBC)
Airline Flybe is in talks about selling its runway slots at London’s Gatwick Airport. The Exeter-based company currently has 25 take-off and landing slots at Gatwick.
Easyjet is one of the companies Flybe is believed to be in discussions with. Flybe said it was in talks with a “number of parties”. The potential sell-off news has resulted in Flybe shares rising by more than 20%.
Flybe was floated on the stock market at the end of 2010. Since then it has faced soaring fuel costs, falling passenger numbers and higher airport duty.
It is also reviewing its network of 13 UK bases of Aberdeen, Belfast City, Birmingham, Edinburgh, Exeter, Guernsey, Glasgow, Inverness, Isle of Man, Jersey, Manchester, Newcastle and Southampton.
Last week, the airline and the British Airline Pilots’ Association confirmed pilots had agreed to a 5% pay cut to avoid compulsory redundancies.
A slots sell-off could provide it with a cash injection of up to £20m. Selling all the slots would see Flybe quit its main London hub, although it also flies a small number of services from Luton Airport.
Flybe said: “Discussions are ongoing and there can be no certainty as to whether any transaction will be forthcoming.” Easyjet declined to comment.
Flybe is expected to post another year of losses for the year to the end of March.
Its direct destinations from Gatwick include: Belfast, Guernsey, Jersey, Newcastle, Newquay and France.
Analysts say they believe Flybe has a fundamentally sound business model, but it’s one which requires some tinkering.
That has been happening, with the airline cutting costs and reorganising the way it works.
This potential sale of the slots at Gatwick could help tide Flybe over through its struggles and to better times ahead if the economy begins to recover and more people once again take to the skies.
However, it could have very significant knock-on effects on the South West’s [air] transport links with London.
Flybe is the only airline that flies from its base region to London, with three flights a day from Newquay.
They are marketed specifically for business travellers, as train trips into the capital can be five hours or so.
Potentially losing them is a big concern for Cornwall’s business community.
Flybe Sees Full-Year Loss at Low End of Guidance as Sales Stall
Flybe Group Plc , Europe’s biggest regional airline, predicted an underlying pretax loss for the last financial year at the low end of its guidance on sales that are little changed.
Costs for the financial year ended March 31 rose about 2.5 percent in line with guidance, the Exeter, England-based carrier said in a statement today. Group revenue will be in line with that of last year, when it was 615.3 million pounds ($943 million), it said.
Flybe Chief Executive Officer Jim French announced details of a cost-reduction plan in January. The airline’s regional focus means Flybe has higher unit costs and fares than discount carriers such as Ryanair Holdingsand EasyJet Plc.
“The group has been taking significant actions to restore profitability,” Flybe said today in the statement. Initial cost-cutting efforts should allow the airline to beat a 25 million-pound target in the current year, it said.
The airline ended the financial year with 54.4 million pounds in cash.
Flybe shares have declined 18 percent this year in London trading, giving the company a market value of 31.6 million pounds.
Air Passenger Duty ‘adding to Flybe losses’
Flybe has blamed the Government for exacerbating its losses, which are forcing the embattled airline to axe 300 UK staff.
By Nathalie Thomas (Telegraph)
23 Jan 2013
The regional carrier, which is heading for losses of more than £14m this year, is paying out £68m in air passenger duty (APD) annually – 18pc of its UK ticket revenues.
This is three times the percentage paid by rivals British Airways and easyJet as a bigger proportion – three quarters – of Flybe’s passengers fly on domestic routes, obliging them to pay APD [£13 each time – ie. £26] twice.
APD is levied on all flights that depart a UK airport and Britain has the highest rate in the world, according to the Fair Tax on Flying campaign group.
Flybe chief executive Jim French, who along with other executive directors will forfeit one month’s pay to help stem losses, said the carrier would generate a “nice healthy profit” if it paid the same in percentage terms as its competitors.
Reducing Flybe’s APD bill to 6pc of UK ticket revenues would result in a £45m lower tax burden each year, Mr French said, adding that he has spoken to the Prime Minister’s advisers, the Deputy Prime Minister and the Transport Secretary about the burden of APD.
The airline is urging its staff and unions to lobby the Government to introduce a two-tier regime, which would see passengers flying from regional airports pay less in tax and those departing from one of the London airports shoulder a slightly greater cost.
“You could significantly reduce the charges of APD in the regional aviation and domestic sector with a relatively small increase in the departure tax out of the London airports, where disposal income is much higher, where businesses are more successful and where there is a high congestion charge,” Mr French said.
APD is a tax levied on passengers through their ticket price but Mr French said due to the consumer downturn the airline has been unable to pass on all costs to customers and had to help meet the bill through savings.
A spokesman for the Treasury refuted that tax was to blame for the 300 job losses.
“The Government took action to freeze Air Passenger Duty in 2011, even after last year’s rise most passengers will only pay an extra £1 in APD. The airline industry also benefits from an historically low rate of corporation tax, the fact that the UK does not levy VAT on domestic flights and aviation fuel not being taxed,” the Treasury spokesman said.
Flybe on Wednesday unveiled the first part of a major restructuring programme, designed to return its UK business to profit in the 2014/15 financial year.
The overhaul, which will cost £10m-£12m in order to save £35m by 2014/15, will see Flybe axe about 10pc of its 3,000-strong workforce in the UK, including 20pc of management roles.
The group and operating boards will also be slimmed down and the company’s five executive directors, including Mr French, will surrender a month’s pay. Mr French is on a basic salary of £510,000.
The carrier will also conduct a “thorough review” of its route network.
Flybe is hoping to reduce its reliance on the UK domestic market, which has slumped by a fifth in the last five years, by operating more planes on contract for European carriers.
In the three months to December 31, £46.1m of Flybe’s £193.9m revenue under management was generated by contract flying.
Flybe has issued five profit warnings since floating at 295p a share in 2010.
On Wednesday it confirmed that has held talks with Ryanair about possibly taking over some Aer Lingus routes in the event that European competition authorities agree to the low cost carrier’s proposed takeover of Ireland’s national airline.
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