Flybe puts itself up for sale amid tough conditions

Profit warning prompts action
Profit warning prompts action

Under-pressure 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, which operates significant hub from George Best Belfast City Airport, 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 hit from rising fuel costs and the weak pound.

The alert sent shares tumbling by more than a third on the day and nearly 75% has been wiped off its stock market value since December.

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.

Flybe has 78 planes operating from smaller airports including London City, Southampton and Norwich, and flies to destinations across the UK and Europe.

It carries around eight million passengers a year.

In half-year results also announced on Wednesday, Flybe saw cost-cutting help lift underlying pre-tax profits to £9.9m from £9.2m a year earlier.

Statutory pre-tax profits for the six months to September 30 more than halved to £7.4m from £16.1m a year earlier.

Group revenues fell 10% or 2.4% on an underlying basis to £409.2m after it cut capacity by 9%. Passenger numbers edged 0.6% higher to 5.2m.

CEO 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.”