As many as 500 more jobs are at risk at Flybe in the latest stage of a financial turnaround plan at the regional carrier.
News of fresh job cuts following a management shake-up came as Flybe reported an improved financial performance in the six months to September 30.
The carrier made a pre-tax profit of £13.8 million against a loss of £1.6 million in the same period last year as revenues rose by 20% to £477.3 million.
A three-pronged action plan was announced today including:
- Rationalising the route network, reviewing the fleet mix, removing of surplus capacity and improving aircraft and crew utilisation;
- Further cost cuts – all aspects of the business are being reviewed to drive further savings;
- Optimising pricing and revenue management, refocusing network development, strengthening route management, “step change” marketing impact and developing trading partnerships.
This will deliver a further £7 million in savings this year and £26 million next year, with around 500 redundancies and estimated one-off and surplus capacity costs of £14 million this year plus a further £27 million in 2014/15.
The first two phases of the turnaround are on track to provide savings of £40 million this year and £45 million in 2014/15 under new chief executive Saad Hammad (pictured).
“This will require tough decisions to be taken over the coming months and, regrettably, this proposal may result in the loss of around 500 jobs spread across the business,” the airline said.
“Consultation with trade union and staff association representatives on these proposals will start shortly.”
Hammad said: “I joined Flybe in August this year. It was clear to me that the existing Phase 1 and 2 cost savings were necessary, but we simply needed to do more and to do it immediately.
“The business needed action now and so today we are explaining our next phase which encompasses a review of everything we do and how we do it.
“Most of the immediate actions are completed, being implemented or already being consulted on.
“Unfortunately there is a proposal for further redundancies. We will consult with the trade unions and employees to ensure that this is done fairly and delivers the right outcome for the business.”
He added: “While the economic environment remains challenging, the board is confident that the actions announced today will provide a firm basis for future growth.
“We will make Flybe the best local airline in Europe. This is ambitious, but achievable provided that we can transform our cost base and efficiency now.”
Flybe’s UK operations carried 5.6% more passengers in the six months at 4.3 million with an improved load factor up 3.6 percentage points to 68.6%.
The UK airline made an operating profit before restructuring was £10.1 million against £1.9 million in the same period a year earlier.