BREAKING | British Flybe enters formal sale process
Flybe, independent regional airline from United Kingdom, is looking into a potential sale and is already in talks with “a number” of strategic operators. The airline announced the news on November 14, 2018, as it revealed latest financial results, posting a profit plunge by half to £7.4 million − versus £395.2 million in costs.
Flybe is reviewing strategic options to “address the current challenges” and is initiating a formal sale process. The airline is now in what it calls “an offer period” and discussions with potential buyers are already ongoing.
The challenges that Flybe is reacting to can be summarized as a lowering European short haul market profitability. The UK carrier is affected by weaker sterling value, softening short-haul market growth and, of course, increasing fuel prices, according to the company CEO Christine Ourmières-Widener. Brexit, although currently not its biggest problem, also leaves the UK airline in “major uncertainty”.
On November 14, 2018, Flybe revealed £395.2 million costs versus just £7.4 million profit in the first half of 2018/2019 financial year. Although the airline’s costs are £14.6 million lower than previous year (£409.8 in H1 2017/18), so is its profit. In fact, the profit plunged by more than half (54% in particular), as last year, it was £16.1 million.
“In line with our strategy, we reduced seat capacity in the first half by 9.0% delivering a 7.2% increase in revenue per seat. Continued improvements are being seen into quarter three which demonstrates the popularity of Flybe for our customers,” Ourmières-Widener is quoted as saying in a statement.
Flybe is currently reviewing its business in terms of cash management, cost savings and capacity reduction. “This is already starting to have a positive impact, as shown by the improved first half adjusted profit before tax; however, we must do more in the coming months,” according to Ourmières-Widener.
The carrier strives to reduce its fleet from current 78 to 70 aircraft, giving up larger aircraft and leaving smaller and more cost efficient Embraer 175 and Bombardier Q400 planes that allow increasing load factors.The first aircraft to go from the current fleet will be two Embraer 195 jets, as their lease agreements expire in H2 2018/19.