Regional airline Flybe puts itself up for sale
Move comes weeks after profit warning over falling demand
Flybe serves Dublin, Cork, Knock and Belfast. Photograph: PA Wire
Beleaguered UK regional airline Flybe is in talks about a possible sale of the group weeks after warning over profits.
The Exeter-based carrier said it is also looking at cutting further costs and flight capacity as it battles challenging conditions in the airline industry.
The group is in talks with a number of “strategic operators” about a potential sale and has hired Evercore as adviser to help with the review and sale process.
It comes weeks after Flybe warned over profits following falling demand and a £29 million (€33 million) hit from rising fuel costs and weak sterling.
The alert sent shares tumbling by more than a third on the day and nearly 75 per cent has been wiped off its stock market value since December.
But shares in Flybe lifted 6 per cent after news of its sale plans.
Stobart Group walked away from a bid for Flybe in March after the two firms failed to agree terms.
But Stobart, which already has a franchise agreement with Flybe, could reportedly come back into the frame.
Shares in Stobart lifted nearly 2 per cent on speculation over possible bid interest.
Flybe has 78 planes operating from smaller airports including London City, Southampton and Norwich, and flies to destinations across the UK and Europe. In the Republic, it serves Dublin, Cork, Knock and Belfast.
It carries around eight million passengers a year.
In half-year results also announced on Wednesday, Flybe saw cost-cutting help lift underlying pretax profits to £9.9 million from £9.2 million a year earlier.
Statutory pretax profits for the six months to September 30th more than halved to £7.4 million from £16.1 million a year earlier.
It saw group revenues fall 2.4 per cent on an underlying basis to £409.2 million after it cut capacity by 9 per cent.
Passenger numbers edged 0.6 per cent higher to 5.2 million.
Chief executive Christine Ourmieres-Widener said the group continued to see improvements in the third quarter and added that cost savings had already helped to drive progress in boosting profits.
But she added: “There has been a recent softening in growth in the short-haul market, as well as continued headwinds from higher fuel and currency costs.
“We are responding to this by reviewing every aspect of our business, especially further capacity reduction, cash management and cost savings.”
Trade unions raised concerns over the impact of a potential Flybe sale on the carrier’s 2,300 employees.
He added: “Balpa believes that Flybe is fundamentally a sound airline and we will scrutinise any offers to buy Flybe very carefully to ensure continued employment is protected.
“We also expect to be consulted by Flybe and potential bidders over any future plans they have for the airline and its employees.”
Unite national officer Oliver Richardson added: “Flybe’s workforce is the lifeblood of the airline, delivering excellent customer service, while working hard to ensure it remains profitable.
“News of a potential sale will be unsettling for workers.” – PA