I wonder if flyBe can actually shrink to profitability? I don't think any airline has successfully done that in history. I agree with statements that flyBe needs to concentrate on 'core' routes - what are these though? Although markets like MAN and BHX are mentioned, are they really making money flying a 76 seat jet to MXP when easyJet are on the same route and FR are flying up to twice daily to Bergamo. It might be better to serve the smaller regional airports - if you can avoid competing with yourself.
In any case flyBe have long had a problem competing with peers. They couldn't do it at Gatwick, have had a few stabs a LCY and are also at LHR. If flyBe want to improve the per-seat costs of the Q400 fleet they could install an extra 6-8 seats, but fundamentally flyBe needs to decide what kind of airline it wants to be and to stick with it. "Faster than Road or Rail" seemed a good idea and implied that although flyBe may be more expensive than other modes, flying would be quicker - maybe.