Flybe plans to cut another 500 jobs

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By on Tuesday 12th Nov, 2013 at 15:17

Flybe's new chief executive will cut another 500 jobs, the number of aircraft it flies and its route network as part of a major overhaul to ensure long term stability. The plans won immediate plaudits from the City but have annoyed the unions.

Flybe’s shares went up 40%on the news, rising 27.63 to 95.75p, as Saad Hammad set out his plans. The carrier has been a public company for three years but there have been several profit warnings.

Shrinking to grow

“We are shrinking to grow,” said the former easyJet executive, who took over in August. “Even after phase one and phase two of the turnaround, our costs are simply too high.”

The first two phases, designed to deliver savings of £40m this financial year and £45m in 2014/15, were instigated by Flybe’s former chairman and chief executive Jim French as he tried to arrest the nosedive in fortunes following 2010’s calamitous 295p-a-share float.

French left the Exeter-based airline last week after 12 years at the top of the group, with Simon Laffin becoming chairman.

In the initial cost-cutting phase there were 590 job cuts, and this returned the carrier to profit at the half-year, with Flybe reversing last time’s £1.6m losses to record pre-tax profits of £13.8m. Group revenue, including Flybe’s share of its Finnish joint-venture rose 3pc to £351m.

Cuts needed to secure the airline's future

However Hammad said further cuts were needed “if we are going to secure the future of the airline” in what is a “challenging” market. “It’s a tough means to an end but we can make Flybe the best regional airline in Europe,” he said.

Flybe will also take a £5m charge this year for the job losses, which will cut total staff to 2,200. Job losses would be “in all parts of our workforce, including pilots,” noting he had “started at the top”, with a clear-out of three of Flybe’s top managers within six weeks of his arrival.

Jim McAuslan, general secretary of the British Airline Pilots’ Association, said: “This is a distressing day for the dedicated pilots who loyally serve Flybe.” He added that the airline was “vital to connecting the country and driving growth and prosperity outside of London."

‘Pilot utilization’ is under the spotlight says Hammad. Flybe’s pilots flew an average of 374 hours in 2011 versus 813 at easyJet.

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