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- Jack Walker House
Exeter International Airport
Devon, United Kingdom
- Main hub
- Exeter Airport
- United Kingdom
- Business model
- Low Cost Carrier
- Domestic | International
- Association Membership
- Codeshare Partners
- Air France
KLM Royal Dutch Airlines
Commencing services in 1979 and based in Devon, Flybe operates from Exeter International Airport with secondary hubs at Manchester Airport, Birmingham Airport and Belfast City Airport. The airline is Europe's largest regional airline, operating services within the United Kingdom, Ireland, the Channel Islands and Europe.
Location of Flybe main hub (Exeter Airport)
Flybe share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Flybe fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
708 total articles
54 total articles
After three years of widening full year losses, Flybe has reported a return to pre-tax profits in 1HFY2014. The Group’s new CEO Saad Hammad joined in Aug-2013, when long-serving CEO and Chairman Jim French became non-executive Chairman. The break with the past was completed on 5-Nov-2013, when Mr French was replaced as Chairman by Simon Laffin, whose experience includes real estate, retail, media and financial services.
Mr Hammad, a former CCO at easyJet and non-executive director at Air Berlin plc, has immediately increased the targeted benefits under the Group’s restructuring plan, recognising that its previous goals would not be enough. In terms of market presence, Flybe has a strong niche in UK regional markets and a small, but growing, foothold in contract flying in mainland Europe.
However, its cost base remains uncompetitive and Mr Hammad may need to drive out even more cost if he is to realise his aim to make Flybe “the best local airline in Europe”.
In its 3QFY2013 (Apr-Jun) trading update, easyJet has again beaten expectations, with revenue per seat up 6.7% versus previous guidance of around 4%. According to CEO Carolyn McCall, “easyJet has delivered a strong performance in the third quarter in a benign capacity environment” as competitors continued to cut capacity on its routes.
Moreover, easyJet sees better revenue performance continuing into 4QFY2013. Its newly announced FY2013 pre-tax profit target range of GBP450 million to GBP480 million, 40% to 50% higher than last year, is ahead of the GBP430 million consensus forecast.
The stock market has welcomed strong earnings growth and easyJet's plans to order new Airbus aircraft. easyJet’s shares are up 165% over the past 12 months and have more than quadrupled over the past two years. Founder and leading shareholder Sir Stelios Haji-Ioannou may not agree with management and the rest of the shareholders, but at least he can console himself that his family’s holding is now worth around GBP2 billion.
Flybe reported wider losses for FY2013, its third successive year of deteriorating results. Moreover, cash flow weakened, net debt grew and net assets fell. In addition to the challenge of high fuel prices, Flybe has seen a 21% reduction in the UK domestic market since 2007 and its high proportion of domestic traffic has made it particularly exposed to increases in UK air passenger duty. Flybe’s unit costs leave it struggling to compete with LCCs, its load factors are below industry averages in spite of capacity cuts and its labour force is among the least productive in Europe.
In Jan-2013, Flybe announced a turnaround plan, dubbed "Fit to Compete" and updated in May-2013 and Jun-2013. This aims to improve profitability through cutting headcount and other cost efficiencies, to drive revenue enhancements, to generate cash without recourse to shareholders and to restructure the network into a defensible core. The disposal of Gatwick slots to easyJet and deferral of aircraft deliveries will help its cash position, but, while Flybe may no longer be gaining weight, full fitness remains a long way off.
On 23-May-2013, Flybe announced it had conditionally agreed to transfer all of its 25 daily slot pairs at London Gatwick (6% of the total at the airport) to the airport’s leading carrier easyJet for GBP20 million. The deal is subject to approval by Flybe shareholders at an EGM (expected in Jul-2013). Flybe intends to continue to use the slots to operate its existing routes from Gatwick until Mar-2014.
Flybe may have been pondering the decision to end its 22 year association with Gatwick for some time. Its slot share at the airport has declined in recent years, while airport charge increases have disproportionately hit operators of regional aircraft.
Why did Flybe make the decision; what does the deal say about the value of Gatwick slots versus those at Heathrow; and how might easyJet use the slots?
European airline margins have underperformed other regions for years. There are many reasons for this, but our analysis suggests that Europe’s relative lack of consolidation may be a significant one, since margins appear to be correlated with market concentration. Even after a number of significant deals over the past decade, the European market is less concentrated than North America, where consolidation has gone further, to the benefit of margins. Europe is also less concentrated than Asia-Pacific (analysed as its sub-regions), whose margins have consistently been the highest.
If consolidation brings structural benefits, are there still European deals that can make a difference? Europe has a long tail of small carriers, which are unlikely to have a significant impact, but comparison with North America points to the potential for further combinations among the top five. Nevertheless, there are hurdles to such deals, not least of which are the ongoing restructuring programmes at Europe’s Big Three and the incompatibility of LCC/FSC mergers, but some second tier groups could be targets.
This analysis updates CAPA's previous study of European airlines’ labour productivity ("European airlines’ labour productivity. Oxymoron for some, Vueling and Ryanair excel on costs") to reflect the most recent financial results and adds four carriers not included in the original article (Wizz Air, Aegean Airlines and the two IAG subsidiaries British Airways and Iberia).
The contrasting performance of LCCs and legacy carriers is clear, although there are some notable exceptions to the pattern. BA and Iberia’s different labour cost productivity is significant, while Air France-KLM and SAS are weak performers.
We introduce an overall CAPA European airline labour productivity ranking, revealing the carrier with Europe’s most productive workforce, based on six measures.
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