Flybe set for expansion?
Interesting article from business supplement of local Norwich paper, the Eastern Daily Press:-
Flybe could buy up rivals
06 August 2008
Flybe - set for sky-high results Budget airline Flybe last night predicted it will post record results for 2007-8 - and hinted it will look to buy rivals struggling with the hike in oil prices and slowing economy.
Flybe shrugged off claims from one City analyst that smaller carriers are likely to struggle this year and predicted its performance in April, May and June will outstrip profits and revenues for the same time last year.
The comments came just days after Ryanair warned it may make a £47m annual loss this year because of the hike in oil prices, and British Airways blamed a doubling of fuel costs for a fall in pre-tax profits in the three months to June to £37m compared with £298m a year earlier.
Flybe - which operates flights to Edinburgh, Manchester, Dublin, Jersey and Guernsey from Norwich International - said its annual results for 2007-8 will top the £355m turnover and £15.6m pre-tax profit posted in 2006-7.
Mike Rutter, chief commercial officer of Flybe, said that although the price of aviation fuel had risen by 100pc in nine months, the airline's fuel bill was still only 24pc of its total operating costs - compared to 50pc of Ryanair's operating costs.
Mr Rutter said: “So why are we at Flybe so confident that we'll be able to, forgive the pun, ride out the current economic turbulence?
“Well to start with, scale is crucial. As Europe's largest regional carrier - we will carry 8m passengers in 2008 - we have been preparing for these challenges for five years.
“Though no one could have predicted just how large the increase in the oil price would be, we were clear it was going up.”
He added: “We were also clear a couple of years ago that consumer appetite for visiting places they'd never heard of would wane, dented by a weakening economy and a consumer backlash to the low-grade service attitude of some of the hard-core low-cost airlines.
“As a result we have developed an extensive route network to city-centre destinations, of which over 80pc are on a frequency of two or more a day, whereas many of our competitors have the opposite.”
Mr Rutter said that Flybe had been “highly acquisitive” in the past and that it “intends to grow despite these difficult financial times”.
Richard Jenner, managing director of Norwich International, said he was pleased to hear Flybe would post record results.
“We're pleased that it means they are strong players in the market, they have a base here and we still hope over time they will grow capacity here on routes that are viable for them,” Mr Jenner said.
Niall Duffy, head of press and public affairs for Flybe, said: “It is tough out there, but we are in much better shape than other airlines, because of the investment we've made in our aircraft and the fact that, uniquely, we are ahead of 2007 in the same quarter. That leaves us in a very strong position.”