Jobs saved as Flybe plan jets towards costs target

Regional airline Flybe said it would lay off fewer staff than previously thought, as it revealed an uptick in business over the winter.

Flybe are 'on track to deliver 40m of annual cost savings'. Picture: PA

The carrier said its turnaround plan, which involves shedding jobs, cutting routes and grounding aircraft, was “accelerating” and would produce substantial savings this year and next.

Chief executive Saad Hammad, who replaced Scots-born Jim French last year, said: “We are on track to deliver £40 million of annual cost savings from phases one and two of the turnaround plan by 31 March, and significant rapid progress has been made already.

“Taking decisive action gives us a strong platform to implement our strategy, achieve profitable growth and build sustainable value for our shareholders. We are well on our way to becoming Europe’s best local airline.”

The firm said it now expects to shed 450 jobs, as opposed to the 500 estimated in November, while it also reckons it can reduce the costs associated with aircraft grounding.

Flybe’s refocus towards the larger sites in its network has seen it close bases in Aberdeen and Inverness, as well as Guernsey, the Isle of Man, Jersey and Newcastle, although it will continue to fly to those airports.

Previously, 133 job cuts had been expected across four Scottish airports, including 49 posts going at Edinburgh, 37 at Glasgow, 35 at Inverness and 12 in Aberdeen.

Its base in Exeter is still expected to be the hardest hit for job losses, with around 100 posts set to go. Flybe has already discontinued 30 unprofitable routes for this summer as part of its restructuring drive. By the end of the season, it will also have grounded 14 aircraft.

But last week the company said it would expand its operations in Birmingham with seven new routes, including Cologne, Florence and Porto, making the airport its biggest base with 12 aircraft in total. The move will see Flybe become Birmingham Airport’s largest carrier.

It noted that its third quarter trading for 2013-14 was in line with management expectations, with a 5 per cent increase in total revenue to £203.5m.

The rise was driven by “white label” contract work for its joint venture in Finland, which saw revenues climb 23.7 per cent to £52.2m.

Revenues for its UK airline business were broadly flat at £137.6m, despite a 1.8 per cent cut in capacity. Passenger numbers grew by 9.2 per cent to 1.9 million.

The airline admitted its revenue will be affected in the short term as it discontinues unprofitable routes, but said its “improved cost structure” would provide it with “a firm foundation for future profitable growth”.

Liberum analyst Gerald Khoo said: “Part of Flybe’s strategy to improve its commercial performance is better revenue management, and there is clear evidence of this being delivered.”