Mon, 21st Apr 2014

Echo Business

Airport's main operator Flybe reveals redundancies

By Patrick Knox

10:10am Wednesday 23rd January 2013

Flybe axes jobs at Southamption airport

FEWER than 20 jobs face the axe at Southampton airport as regional airline Flybe battles to stem losses.

Management and engineering posts will go by Spring as part of a national culling of about 300 jobs to cut costs by £35million.

Southampton Airport’s largest operator is also considering outsourcing further support functions, including ground handling and onboard catering.

But bosses said no routes from the city's airport would be cut, although they did not rule out reducing the frequency of flights.

Increasing costs such as rocketing tax and fuel costs are being blamed for the worst job losses in the company's history.

Elsewhere in the UK, support and production roles such as human resources and IT will be affected by the jobs cuts, while around a fifth of its management team is being cut.

The group, which flies from airports including Bristol, Cardiff, Doncaster, Edinburgh and East Midlands, is also putting its network of 13 UK bases under review and will give further details in the summer.

Flybe, which outsourced its call centre last month in a move impacting 55 jobs, slumped into the red by £1.3 million in the six months to September 30 against profits of £14.3 million a year earlier.

It blamed the loss on high fuel costs and falling numbers of fliers.

Quarterly figures today revealed a 1.7% improvement in the number of passengers flown to 1.8 million in the three months to December 31, but passenger revenues fell 1.2% to £136.9 million and costs increased by an equivalent of 0.8% per seat.

Andrew Knuckey, chief financial officer of Flybe, said wider economic pressures and the impact of air passenger duty hikes in recent years meant it ''had no choice'' but to cut jobs to bring costs down.

The overhaul will reduce Flybe's three divisions to two, comprising Flybe UK and a new outsourced services function.

As well as the jobs impact, Flybe will also cut costs with suppliers such as airports and maintenance providers, roll out fuel efficiency programmes and introduce further automation at check-ins.

The group's aircraft fleet will be reduced by seven in addition to the overhead cost-cutting.

Jim French, chairman and chief executive of Flybe, said: ''I am extremely disappointed that many valued and hard-working colleagues may have to leave the organisation.

''It's a decision the board and I 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.''

But he added the restructure delivers a ''clear and realistic plan to return Flybe to profitability''.

Flybe warned in November that it was facing the toughest conditions in its history after seeing fuel costs rise by nearly a quarter, while demand was being stifled by air passenger duty hikes.

The group is hit particularly hard by passenger duty, as it is charged both ways on UK domestic flights and accounts for 18% of its ticket revenues.

It said services had been resilient amid this month's snow and adverse weather, with around 4% of 500 flights a day cancelled at the height of the disruption.

Flybe added that passenger sales for the three months to the end of March were 2% ahead of last year, while sales for the summer showed a 5% rise.

But the group said the overall outlook had failed to improve since a difficult start to its financial year.

Flybe has been increasingly setting its sights on continental Europe to offset the UK woes and recently formed a joint venture with Finland's flag carrier Finnair.

Its European operation now accounts for 40% of business and the group is looking to make further tie-ups and acquisitions.

The group has issued a series of profits warnings in recent years, causing its shares to slump in value from about 325p at the time of its flotation at the end of 2010 to 48.5p today.

To read Flybe chairman Jim French's statement on the job cuts click here

Comments(19)

Comments(19)

Pikey Pete says...
8:31am Wed 23 Jan 13

Well it had to happen. When Flybe charge 190 pounds from Alicante to Southampton.

And Ryan air charge 32 pounds for Alicante to Bournemouth.

Perhaps Ryan air needs to be at Southampton.

elvisimo says...
8:35am Wed 23 Jan 13

**** Pete wrote:
Well it had to happen. When Flybe charge 190 pounds from Alicante to Southampton. And Ryan air charge 32 pounds for Alicante to Bournemouth. Perhaps Ryan air needs to be at Southampton.
will make no difference - there are only certain sized planes that can fly from Southampton hence fewer seats and higher prices. You are paying for convenience. Thats why there are no Easyjet flights or Ryanair flights.

Pikey Pete says...
8:44am Wed 23 Jan 13

Point taken elvisimo.

However. Flights from Southampton to Alicante on B737s (Same as Ryan air).

Has happened before and to Majorca Palma. Same nautical miles distance.

sotonwinch09 says...
8:56am Wed 23 Jan 13

Flying with flybe to Amsterdam on Friday. Flights were £70 return. Just need to know when to book to get cheap flights.

loosehead says...
9:04am Wed 23 Jan 13

elvisimo wrote:
**** Pete wrote:
Well it had to happen. When Flybe charge 190 pounds from Alicante to Southampton. And Ryan air charge 32 pounds for Alicante to Bournemouth. Perhaps Ryan air needs to be at Southampton.
will make no difference - there are only certain sized planes that can fly from Southampton hence fewer seats and higher prices. You are paying for convenience. Thats why there are no Easyjet flights or Ryanair flights.
Could they move the run way?
maybe build an underpass & go across what is now a road & into the fields? so extending the run way for bigger planes?
my brother lived in Darwin rd & he said this would be a great option if they could do it?

Aisha1 says...
9:16am Wed 23 Jan 13

Yeah loosehead, great idea. Let's ruin some more green areas why don't we?

Jewel14 says...
9:25am Wed 23 Jan 13

loosehead wrote:
elvisimo wrote:
**** Pete wrote:
Well it had to happen. When Flybe charge 190 pounds from Alicante to Southampton. And Ryan air charge 32 pounds for Alicante to Bournemouth. Perhaps Ryan air needs to be at Southampton.
will make no difference - there are only certain sized planes that can fly from Southampton hence fewer seats and higher prices. You are paying for convenience. Thats why there are no Easyjet flights or Ryanair flights.
Could they move the run way?
maybe build an underpass & go across what is now a road & into the fields? so extending the run way for bigger planes?
my brother lived in Darwin rd & he said this would be a great option if they could do it?
Can't extend the runway & it's the residents in Eastleigh that will object to bigger planes 'cause they make so much more noise.

Sometimes fares seem to cost a lot, but check the breakdown: actual fare AND taxes, which often are more than the fare!

I agree, it'll be difficult to fill bigger planes, that's why BA pulled out of Southampton, & why Easyjet & Ryanair won't make money either.

emsworth steve says...
10:40am Wed 23 Jan 13

Not only is the Soton runway too short, it's also too narrow for bigger aeroplanes.

Brock_and_Roll says...
10:45am Wed 23 Jan 13

Flybe is fundamentally a good business that has been decently run since the Jack Walker days.

At the end of the day they have had to take some really tough decisions to resotre profitability on the face of a trippy-whammy of:

1) higher fuel costs
2) higher taxes
3) UK & European recession

They are a pretty lean and mean operation and I have no doubt they will live to fight another day and will still be flying out of Southamton a decade from now.

derek james says...
11:16am Wed 23 Jan 13

demand stifled by air passenger duty hikes= more jobs lost to green taxes along with steel jobs and aluminiumum industry jobs, when the greens have finally shut down the economy will they turn the lights out?

Rockhopper says...
11:27am Wed 23 Jan 13

Not surprising as Flybe has continued to be more expensive than other airlines.

Mentsugi says...
12:05pm Wed 23 Jan 13

Its quite sad really as I used to fly 4~6 times per month with Flybe from Southampton to Brussels and Frankfurt with my job. The Brussels flight always seemed to be busy but the Frankfurt one about 1/3 full. However over the recent months both the Brussels and Frankfurt route have been removed so I have to now go to Heathrow for these flights. A pain. It looks like Flybe have given up on the business flights to prioritise the holiday/vacation market and in doing so made themselves vulnerable to customer cutbacks due to increased attack on household income by the government.

adamello says...
12:16pm Wed 23 Jan 13

it doesnt say where the cuts would be, it maybe southampton, maybe elsewhere

kingnotail says...
2:54pm Wed 23 Jan 13

derek james wrote:
demand stifled by air passenger duty hikes= more jobs lost to green taxes along with steel jobs and aluminiumum industry jobs, when the greens have finally shut down the economy will they turn the lights out?
We all know who killed the steel industry, and it wasn't any 'greens'..

ameliaS says...
6:06pm Wed 23 Jan 13

Shedding 300 employees will save £35M - obviously not all wages but how much do they get paid?
Have to say that Flybe flights to some destinations have already been cut making life difficult for those of us needing travel. Will have to fly from London instead which is bad news for the local airport.

memush says...
7:34pm Wed 23 Jan 13

If you are able to book early enough Flybe are not that much more expensive and there is the convenience of using southampton and travel cost savings.
Standards are excellent on Easy and Flybe but in my experience Ryanair----well nuf said.
How many seats are available with Ryanair at their "from" price??

derek james says...
10:13pm Wed 23 Jan 13

kingnotail wrote:
derek james wrote:
demand stifled by air passenger duty hikes= more jobs lost to green taxes along with steel jobs and aluminiumum industry jobs, when the greens have finally shut down the economy will they turn the lights out?
We all know who killed the steel industry, and it wasn't any 'greens'..
i think you'll find the recent shutdowns in this country by tata have been in no small measure do to the excessive cost of electricity and the tubes division which is a world leader is struggling at the moment

WoolstonSean says...
11:44pm Wed 23 Jan 13

**** Pete wrote:
Point taken elvisimo. However. Flights from Southampton to Alicante on B737s (Same as Ryan air). Has happened before and to Majorca Palma. Same nautical miles distance.
Ryanair NOT Ryan air fly Boeing 737 800s which can not take off from Southamptons 5.600m runway fully loaded and are totally unsuitable for the runway at Southampton.
Previous airlines using 737s from Southampton such as Thomson used Boeing 737 300s that can use the runway with no penaltys with a range of approx 2000 NM.
Boeing 737 300s are not in service with Thomson along with many other airlines any more as they fly the newer 800s series similar to Ryanair..
Easyjet fly Airbus A319s from Bournemouth and they would easliy be able to use the runway as they have been regular users of the facilitys at Southampton but still with a limited take off penalty but the problem is that there are limited aircraft stands at Southampton and only two Airbus A318/319/320 plus Boeing 737/757 and Embraer 170/195s currently used by Flybe type aircreaft can be accomodated at any one time due to the fact that the aircraft stands are for aligned for smaller types of aircraft such as the Dash 8s used by Flybe.
Easyjet have lower airport costs at Bournemouth compared to Southamton plus the longer runway at Bournemouth helps with there operations particulary in bad weather plus with the lack of aircraft stands at Southampton we wont be seeing Easyjet any time soon at Southampton unless Flybe goes belly up and that would leave Southampton with a huge hole in its operations.
The real reason why Flybe are axing staff at Southampton is the fact that the mojority of it's flights are domestic where passengers are paying APD at both ends excluding Northern Island so its APD thats killing the airline business at Southampton along with the rest of the UK and it's about time this government looks into it as it is killing inbound as well as outbound tourism in this country through an uneven and unfair stealth tax!
BTW someone mentioned about the width of the runway at Southampton, it is 38m wide which makes it the second narrowest runway after London City classed as a major regional airport but still capable of handling aircraft upto the size of a Boeing 757 which is the largest aircraft capable of using Southampton.

WoolstonSean says...
7:36am Fri 25 Jan 13

adamello wrote:
it doesnt say where the cuts would be, it maybe southampton, maybe elsewhere
The cuts are being made at the HQ of Flybe at Exeter as well as bases at Birmingham and Manchester.
In Flight catering as well as ground handling are most likely going to be outsourced.
Southampton will not be affected in these cuts, in fact the summer 2013 schedule will see an almost 10% increase in Flybe flights from the airport with an increase in flights to current destainations mainly in Europe but with a slight decrease in domestic flights due to the high APD which is paid at both ends making some flights unviable especially off peak.

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