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Capital Breakfast with Jono and Emma 6am - 10am
23 January 2013, 10:10
The airline which operates out of Southampton is having to cut costs by £35million pounds to stem losses.
Flybe is also considering outsourcing further support functions - including ground handling and onboard catering.
The airline's Chief Executive Jim French said: "Today's restructuring plan for the airline has clear, two year profit targets which we believe are deliverable and realistic. A new, slimline business model for UK scheduled services underpins a turnaround which I expect will deliver a £3.00 per seat profit target in the medium term. Today?s announcement of a turnaround strategy for the UK 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, particularly in Europe.
"It is a matter of great regret that many valued and hard-working colleagues may leave the organisation and it was a decision I and the Board have not taken lightly ; it's one we have tried to avoid and it is the first time in almost 30 years of business that we have had to take such action. However, faced with the brutal impact of a 160% rise in Air Passenger Duty (APD) over the past six years and the consequent 20% decline in domestic traffic over the same period, we have to recalibrate the business. There is no escape from the £68M per annum APD tax burden which Flybe has to pay as a result of increases successive governments have levied on the industry. 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%.
"Recognising that any significant change to either the UK Economy or the redistribution of APD is likely to be some way off, today?s announcement represents a clear and realistic plan with a measurable timescale and benchmarks, based upon significant restructuring and cost reduction to return Flybe to profitability. We are committed and focussed on the delivery of this plan, continuing to provide strong customer service to more than 8 million passengers each year; to provide secure and long term employment for the remainder of our staff and to improve shareholder value."