Airline blames job losses on fewer passengers and high tax
Exeter-based Flybe has unveiled a "turnaround plan" to safeguard its future – at a cost of 95 Westcountry jobs.
Chairman and chief executive Jim French also confirmed that further roles could be transferred to outside organisations, as the airline focuses on a £35 million cost-savings exercise to get out of the red.
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Analysts expect Flybe to report a pre-tax loss of £17 million for the 12 months to March 31, excluding the £10-£12 million restructuring costs.
The airline is set to slash its 3,000-strong UK workforce by 10%, saying: "Given that the airline is headquartered in Exeter, the numbers of staff impacted there represent the largest of any Flybe location." Flybe currently has around 1,100 employees based in Exeter, who will be informed over the next 48 hours where the job losses could fall.
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It is understood that about half of the Exeter roles to be cut will be engineers with the remainder being back office staff and managers.
Mr French said the airline had been battling against the "brutal" impact of a 160% rise in Air Passenger Duty (APD) over the past six years and a 20% decline in domestic traffic over the same period, which had left it with no choice but to "recalibrate" the business.
Internal UK flights account for around 70% of its business, which exposes it to double the APD costs for a domestic return journey, compared to airlines flying passengers back to the UK from overseas.
Mr French, who has called on the Government to ease the APD burden on UK airports outside London, said: "Flybe now pays more than 18% of our ticket revenues to the government in APD, whilst other UK-based carriers who operate a greater proportion of their business outside of the UK pay less than 6%."
Two of the group's Westcountry-based operations are part of the business's blueprints for growth announced yesterday.
Exeter-based engineering arm Flybe Aviation Services and the Flybe Training Academy will join with the contract flying service it delivers on behalf of other European airlines, to form a new division – Flybe Outsourcing Solutions.
This will be headed by Mike Rutter, currently managing director of the contract flying division, Flybe Europe. Mr French said they were already in "advanced talks" with two European carriers seeking to outsource engineering, maintenance, training and short-haul flights via Flybe.
He added: "Today's announcement of a turnaround strategy for the business is a clear indication that Flybe has a plan not only to address the challenges we face, but also one to exploit the opportunities available."
Derek Phillips, Vice President of Exeter Chamber, said: "Air passenger duties are affecting regional airlines disproportionally and we look to the Government to reconsider, A well serviced regional airport is vital to ensure Exeter is attractive to investors."
Comments
by ROOMATTHETOP
Thursday, January 24 2013, 12:01PM
“The reason that fewer people are flying is because air travel has become an unpleasant and stressful way to travel. The security checks are overbearing, intrusive and wearying. Go to Europe by train, it's much nicer. It's more pleasant, too, to take a ship to the Americas. It takes three days longer but it is not dehumanising.”