FLYBE has performed a rapid turnaround by deciding to re-establish the Aberdeen base that it closed down earlier this year, creating up to 100 jobs in the process.
The regional airline will base four 78-seater Bombardier Q400 planes at Aberdeen International Airport from 29 March, supporting roles across flight crew, engineering and ground-handling staff. The previous operation was closed in January as part of a cost-cutting drive to return the struggling carrier to profitability.
That strategy, led by chief executive Saad Hammad, included job cuts, grounding surplus fleet, surrendering airport slots and exiting unprofitable routes. The restructuring allowed Exeter-based Flybe to turn a profit of £8.1 million last year, against a previous full-year loss of £41.1m.
But latest figures show the budget regional carrier swinging back into the red in the first half of this year. A series of one-off costs led to a pre-tax loss of £15.3m for the six months to 30 September, against a £13.8m profit a year earlier.
Flybe emphasised its core UK business was continuing to improve, with underlying profits up by £2m to £13.7m. Passenger revenue per seat rose by 8.7 per cent to £54.75, while load factors rose 8.6 percentage points to a record 77.2 per cent. The group said it remains on course to deliver £24m in full-year cost savings.
However, the bottom line was hampered by an impairment charge on the disposal of its 60 per cent stake in loss-making Flybe Finland, which is being sold to partner Finnair for a nominal €1. New rules on compensating passengers for flight delays forced the group to take an additional provision of £6m.
Flybe is on course to record a “small pre-tax loss” for the full year, according to Liberum analyst Gerald Khoo.
Hammad said the new flight delay compensation rules were “unfortunate” and “discriminatory”. Most Flybe routes compete with rail and ferry operators unfettered by any such scheme.
“It’s unfortunate because [compensation for] any delay of three hours or more is more than three times the average ticket price of Flybe,” Hammad said. Flybe pegs its average ticket price at less than €85 (£67).
Despite these difficulties, the group said it “now makes commercial sense” to re-open its Aberdeen base. It follows last month’s launch of services between London City and Aberdeen, Edinburgh and Inverness. Speaking at that launch, chief commercial officer Paul Simmons said Flybe was now in “phase two” of its recovery strategy, which involves “taking this slimmer entity and driving it forward”. The Aberdeen base will support routes to London City, Manchester and Flybe Shuttle services.
“I am pleased to report that the success of the actions we were forced to take to return the airline to profitability and stimulate demand has brought us to the point where it now makes commercial sense to re-open our Aberdeen base,” Simmons said yesterday. “It is a testament to a year of recovery, turnaround and the ultimate re-birth of our airline.”
In Aberdeen for the announcement, First Minister Alex Salmond said the re-opening was “a great result”. “Improving Scotland’s connectivity is one of our top priorities, as it will help build strong business links and provide a real boost to our tourism industry,” he added.
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