British carrier Flybe costs fall as turnaround gathers steam
By Karen Rebelo
(Reuters) - British carrier Flybe Group Plc reported a fall in third-quarter cost per seat in the UK and said it would cut fewer jobs than planned, in a sign that its turnaround plan was gathering pace.
The company, which also operates in Finland, has weathered a turbulent 2013, marked by large job cuts, a new CEO, the resignation of four board members, and the airline's biggest shareholder dumping its entire stake.
Flybe, whose investors include British Airways owner IAG and billionaire financier George Soros, has been looking to cut costs by cutting jobs, giving up airport slots, exiting unprofitable flight routes and grounding surplus fleet.
Flybe on Monday said it was working to lower the cost of grounding some of its fleet.
"I see the turnaround plan being delivered as we speak now. This is not a jam tomorrow type of plan that I put together,"
Chief Executive Saad Hammad said.
Hammad, an ex-easyJet executive who took the CEO role in July, said he expected the airline to 'stabilise' within 18 months.
Cost per seat, excluding fuel and restructuring costs, fell 5.2 percent in the company's UK airline business, while revenue per seat rose 2.3 percent.
The airline reported total revenue of 142.9 million pounds for the quarter ended December 31.
"Part of Flybe's strategy to improve its commercial performance is better revenue management, and there is clear evidence of this being delivered," Liberum analyst Gerald Khoo wrote in a note to clients.
"We are encouraged by the clear momentum in the turnaround."
The company said it now expects total job losses to be around 450, 10 percent lower than it had planned.
Flybe, which will exit its slots at Gatwick airport in March, plans to ground 10 aircraft by the end of that month and a further four by the end of the summer.
The airline had estimated one-time charges of 14 million pounds in the current year and a further 27 million pounds in 2014-15 for grounding aircraft, under its "Immediate Actions" plan announced in November.
Shares in the company were up 2.6 percent at 108 pence at 1205 BST on the London Stock Exchange on Monday.
(Reporting by Richa Naidu and Karen Rebelo in Bangalore; Editing by Supriya Kurane and Savio D'Souza)
