Full article text
Well chaps, I used to lurk here about two years ago when I had more time to devote to flight sims (I was also studying towards a PPL at the time but ran out of cash)... I visit again and can already be of (some) use. So I've signed up for an account here to give you the full article - not that it is that interesting:
Flybe, the privately owned UK regional airline, fell sharply into loss last year as a result of the rapid expansion of its route network, write-downs on the value of some of its oldest aircraft and a big rise in fuel costs.
The group also incurred £1.6m in costs for its deferred initial public offering, which the group was forced to postpone last year as it embarked on the takeover of BA Connect, British Airways’ loss-making UK regional operations.
The acquisition of BA Connect, due to be completed shortly following clearance by the Office of Fair Trading, will double Flybe’s turnover and greatly increase its presence in Manchester and Birmingham, two of the biggest regional markets in the UK. It will make the group the largest regional airline in Europe.
The takeover has delayed the IPO by at least a year, however, to the summer of 2008 at the earliest. BA is expected to take a stake of 15 per cent in Flybe as part of the BA Connect transaction, but has said it will sell the stake at the time of the IPO.
According to its latest accounts, published on Tuesday, Flybe fell into a pre-tax loss of £12.2m in the 12 months to the end of March last year, including exceptional items of £8.09m. That compares with a pre-tax profit of £7.8m a year earlier.
Turnover increased by 13.9 per cent to £304m, while fuel costs rose from £27.3m to £49.1m.
The airline embarked on a costly expansion in particular of is UK domestic network, as it responded to the restructuring of the UK aviation market, increased competition at its Birmingham airport base and the need to replace the loss of its lucrative franchise business flying for Air France, which was terminated in March 2005.
The franchise operation generated annual profits of £3.4m.
Jim French, Flybe chairman and chief executive, said in the annual report that the group had added 44 new routes in the year, a 68 per cent increase to 109, which had increased capacity, measured by available seats, by 32 per cent.
Losses on the new routes totalled around £7.5m.
Passenger volumes on the Flybe network rose by 25 per cent to 4.75m, while turnover increased on the Flybe routes, excluding the earlier Air France franchise, by 26 per cent to £304m.
The expansion was aimed at laying “the foundations of further profitability in future years,” said Mr French. “It was recognised that such an ambitious expansion would involve a significant financial risk to the business.”
Mr French said the group was seeing “very significant” financial benefits from the route expansion in the current financial year to the end of March 2007, as the network matured.
Flybe also expected to generate profits of more than £10m from the introduction of charges for checked-in baggage and for advance seat selection.
The group is 81 per cent owned by Jersey-incorporated Rosedale (JW) Investments, one of the family trusts established to oversee the estate of the late Jack Walker, the steel millionaire and owner of Blackburn Rovers Football Club. Flybe has previously traded as British European and as Jersey European.
Mr French holds a 9 per cent stake. A 10 per cent stake is held by an employee ownership trust.
Ta,
Dave