In an update on the progress of 'Delivery and Future Direction', the package of measures implemented by Flybe UK to return to growth, the airline states that the action it has taken so far will deliver £30m of cost savings in 2013/14 against the £25m target.
Flybe has also announced further initiatives under the turnaround plan. The first is an agreement to transfer its 25 pairs of arrival and departure slots at London Gatwick Airport to easyJet for a total consideration of £20m. The realisation of the value of these slots will help Flybe finance its return to profitability, says the airline. Completion is subject to Class 1 shareholder approval, expected in July 2013.
The second initiative comprises an agreement with Embraer for the deferral of 16 new E175 aircraft due for delivery during 2014 and 2015. The aircraft will now not be delivered until 2017 to 2019 and will lead to a reduction in pre-delivery payment commitments in winter 2013/14 of £20m.
Details of Phase 2 of Flybe’s turnaround plan is currently being implemented, targeting a further £12m of savings in 2013/14, and an annual run rate saving of £23m from 2014/15 onwards.
Head count at the airline has already reduced by 22% from 2,730 to 2,140, while Flybe has reached an agreement in principle with the British Airlines Pilots Association (BALPA), for up to a 5% reduction in salary in return for extra time off.
The turnaround plan is being financed without recourse to shareholders through:
Flybe on target with its turnaround plan
