Flybe: not yet "Fit to Compete", but the exercise regime has started

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.