Flybe - 7

[Rivet Joint]

Alycidon: You make a good point. I was specifically comparing their equipment i.e. 50 seat RJ's as apposed to the 21st century solution of a circa 80 seat turboprop.


OltonPete: Nothing wrong with being biased, I quite clearly am. There is no doubt Birmingham is the bigger base and potentially the most profitable. However Southampton for me is arguably the best placed regional airport in the country. There is no doubt that it has the most affluent catchment, potentially has the best transport links and with it being in the very south it is pretty much open to the majority of the regional airports in the country. The bulk of its 1.8 million passengers come from regional traffic and also second home traffic to France. If EZY had the room to come in then they could offer the kind of routes and prices to fulfil SOU's untapped potential. I cannot see how opening a base at BOH is anything other than BE shooting themselves in the foot but I am open to being proved wrong.

[Skipness One Echo]

Flybe share price nosedives after £15.4m loss is revealed | City A.M.

I do not see how LCY and BOH are the answer but time will tell.....
As the economy recovers, BE see falling passenger volume, revenue and increased losses then decide to go head to head with BA CFE in their core LCY market.

[pee]

One important reason behind the shares drop not mentioned above:

Flybe and Finnair have agreed to restructure the ownership of their jointly owned Flybe Nordic venture, and Flybe has agreed to sell the shares that it holds in Flybe Nordic to a potential new majority shareholder or to Finnair for the price of one euro. The sale of the shares is conditional only upon approval being received from the competition authorities.

Flybe Nordic owns fully the Finnish subsidiary Flybe Finland, which is in charge of Finnair’s regional airline operations. Consequently, Finnair is now mapping alternatives to continue Flybe Finland's regional flying with a cost-effective business model and new ownership structure for Flybe Nordic. These alternatives include a potential new majority shareholder for Flybe Nordic.

Finnair and Flybe began their cooperation in 2011 when they founded the Flybe Nordic joint venture, of which Flybe owns 60 per cent and Finnair 40 per cent.

The companies have already for some time discussed the restructuring and cost saving strategy for Flybe Finland. The companies have not been able to arrive at a common understanding to resolve profitability issues. Flybe and Finnair accordingly have signed an agreement under which it is intended that Flybe will exit Flybe Nordic by the end of 2014, subject to approval being received from competition authorities.

The operations and flights of Flybe Finland will continue normally.

“The financial performance of our joint venture has not developed according to the expectations of its shareholders. We haven’t been able to arrive at a common view to resolve the profitability issues, and therefore the companies have agreed to discontinue the cooperation. Finnair aims to find a new majority shareholder and a business model that would enable the development of regional flying in a financially sustainable way,” says Pekka Vauramo, Finnair CEO.

Flybe Finland currently operates to a number of domestic and European destinations from Helsinki on behalf of Finnair on a contract-flying basis. In addition, Flybe Finland operates to five domestic destinations as well as Tartu, Estonia and Norrköping, Sweden at its own commercial risk.

Flybe Finland started operating code share flights in August 2011 with ATR 72 aircraft and two Embraer 170s. On 28 October 2012, the cooperation was expanded to cover European flights with Embraer 190 aircraft as contracted flying, after which Flybe Finland has operated a third of Finnair’s European traffic.

Finnair’s balance sheet includes a 9.9 million euro subordinated loan issued to Flybe Finland in 2011. Finnair has written down the value of its Flybe Nordic AB shares following the realized losses of Flybe Finland.

Finnair also has advance payment and other operational receivables from Flybe Finland. Due to Flybe Finland’s ownership change and the need to restructure its operations, it is possible that a part of these receivables cannot be collected. Finnair is also considering giving working capital financing to Flybe Finland. Finnair estimates that the resulting financial impacts will not exceed -20 million euros. The exact overall impact will be communicated when the ownership structure is defined.

(citing the Finnair press release)

[Han 1st Solo]

Falling passenger numbers and reduced revenue is the result in the slash of loss making capacity, if you fly far fewer planes you'll generate less money and fly fewer passengers. Flybe UK has in fact never been in a stronger position than it is now, all the losses were in Finland hence it been cut loose, the UK operation posted a larger profit than last year, had higher load factors and and an increased passenger revenue per seat and I think once the company has dealt with all the legacy issues from the previous management the figures will be pretty impressive.

As regards the latest base and route decisions, well ABZ is a no brainer and if things hadn't been so desperate when the new management took over it would never had closed. We were told as much by Saad at the base closing meeting. BOH, I don't know how this one will turn out, maybe trying to keep SOU on their toes. STN seems to be a deal done with MAG and we may over time see a larger domestic route network emerge from Flybe at STN without treading on Ryanair or easyjet toes. LCY, as much as I hate the dash, on short sectors of under an hour it's hard to beat on economics. I think Cityflyer have a real fight on their hands, but in saying that apart from 2 or 3 routes I can't see Flybe really competing with Cityflyer as I think Flybe will expand onto other domestics that Cityflyer don't operate. Time will tell but my feeling is that Flybe are at LCY to stay and will do well there.

[cornishsimon]

Iv a funny feeling we might see more announced for NQY soon as the current schedules indicate LGW x3, MAN x1x BHX x1 and then STN x3 Weekly will all operate on NQY based aircraft.

Well currently BE only base one Q at NQY which is crewed by EXT based crew



cs

[Flightrider]

Han 1st solo, I admire your optimism and purely for the sake of the people at Flybe - who have suffered enough turbulence over the last two years - I hope you're right. But, and there has to be a "but" after a statement like that, I can't see it. Some of the decisions being taken here are absolutely insane.

I'm hearing rumours of very light loads on a lot of the LCY flying and the hugely aggressive response of CityFlyer means that their future options are really limited. They've spent £25m buying five aircraft to fly routes from LCY which I don't think have a hope in hell of working.

The overall London strategy is a mess, with NQY still remaining at LGW (best place for it, and supported by a PSO) but then a mixed bag of operations at SEN, LCY and now STN. They just need to add Stapleford for complete cover of that side of London.

The schedules on NCL-STN are a complete joke and IOM-STN is just going to turn that market into a bloodbath. In their current forms, I do not believe either to be long-term propositions.

Then you get to Bournemouth. Twice-daily BOH-MAN, plus AMS, DUB etc? Yep, maybe. Linking BOH to the hub at Manchester (again) is a logical move....except for the fact that one of the two daily flights is scheduled at totally different times to the MAN evening hub banks so misses the connecting potential. The whole Bournemouth exercise looks like a cheap airport fees-chasing exercise and the inclusion of Deauville in the network to my mind confirms that.

Coupled to the recent launch and pulling off ABZ-EMA before it started, I am delighted that I am not a Flybe shareholder as I could take absolutely no confidence whatsoever in their route and commercial decisions. It looks like utter madness. If it turns out to be fantastic and I'm wrong, then I've missed out on the upside I could have had by buying shares, and good luck to those who do. I personally think you'll need some good luck - in shovelfuls.

[Ian Brooks]

The evening BOH/MAN arrives 18.50 and connection out at 20.10 onwards
perhaps not perfect but not that bad but yes I agree the return not good.

[kcockayne]

Flightrider

I completely agree with you.
These business decisions by the new BEE management (apart from selling BEE Nordic) seem to be crazy & in no way any different from the decisions of the old management.
The EZY credentials of the new MD don't look worth the paper that they are printed on.
In short - stupendously baffling & completely lacking in any attraction to any investor !

[Barling Magna]

Why don't flyBE run some useful routes from SEN, where there is an under-used terminal and a clear demand for flights to Belfast and Edinburgh demonstrated by EZY, and no direct competition, rather than try to get in to the LCY market which is hotly contested on some of their chosen routes? Paris, Brussels and Copenhagen would also work from SEN, I believe.

Before anyone mentions yield - I know. No reason why such routes shouldn't be profitable from SEN though, and a safer bet I'd have thought.

[kcockayne]

WingoWango

Time will tell !

If I'm wrong, I'll hold my hands up.

True, he got BEE back into the black, & he might be a financial wizard (for all I know); but he only did that by getting rid of a good few staff & bases (now he's bringing back one of the bases & night stopping at some of the others - bit of a contradiction there). How is he going to get the airline out of a hole the next time round ?
To me, it seems that the next time will come - judging by the new routes. I simply cannot see the logic of operating in parallel out of 'HH & 'HI. Or of taking on competition out of 'LC.

[Deano777]

I don't really know what's so hard to understand. It was a case of close bases and get rid of personnel or there would be no Flybe. We closed the bases that had so few aircraft that the cost base was astronomical. Kcockayne, it's far cheaper to night stop crew than to operate a crew base - fact. When Aberdeen was closed it had 2 or 3 aircraft based there of different types, it cost a fortune. Harsh decisions that nobody liked were made, if they weren't made we'd have all been on the end of the dole queue, including senior managers. Now we're putting 4 aircraft in there of the same type, the business has a significantly lower cost base as wingo said, so even if BOH doesn't work out I don't see how it spells the death nail into Flybe's coffin when it'll only equate to about 4% of the company's overall route network.
There's alot of knowledgeable people on this site, but it also contains the same number of armchair experts. Lets have opinions backed up with facts if you want to discuss the end of people's livelihoods.

[kcockayne]

In reply to the last two posts; I am simply expressing my opinion. I am certainly not describing the MD as a financial wizard (just that he could be for all I know. On second thoughts, I hope he is; for BEE's sake - genuinely !)
I acknowledge that hard decisions had to be, & were , made. I also acknowledge that the airline then made a recovery. Of which, I am glad. I do not bear the airline , its management, or the staff any ill will. Quite the contrary.
I do not want to make light of employees losing their jobs, either. Someone quite near me was in that boat !
I am simply pointing out the apparent contradictions which the management who made the hard choices are now displaying with several of their latest ideas.
I REALLY do hope that everything works out well for them. But, to my way of thinking, there's a lot of wishful thinking going on here !

[Ian Brooks]

MAG cannot afford Flybe to fail as neither can BHX or SOU and EXT as
they are far too important to their business therefore they are going to help in any way they can, be it a business deal to help with new routes
or keep costs down.

Ian

[Flitefone]

HH/HI

The SOU/BOH move by Flybe will be based on facts. The airline has ten years of passenger data operating from the south coast, they know who flies, where they live, which routes they use and often, whether or not they are on business or leisure. The airline management are professional and have sophisticated analysis tools at their disposal. The airline like any business has to grow, this is one string to that bow.


The reality is that many of the SOU passengers originate west and south of the city, basically Dorset, further from LHR and LGW than SOU, they have longer travel times and less propensity to hack up to the London airports for a cheaper fare or better schedule.


Running these new routes in parallel is not so different from the CWL/BRS example of KLM. This latest south coast move importantly gets Flybe further away from the LHR/LGW competition which is the Southampton Achilles heel, the move also leverages routes that have a history of decent numbers from BOH, at least for Paris, Amsterdam, Dublin and Glasgow, even Manchester (if you know the full history MAN was run twice daily with a 48 seat aircraft for years) these routes have legs and with good scheduling, the airports and routes should complement one another, just as the London airports do for countless routes every day... and if you check the CAA stats these are cities that clearly have growth potential based on recent performance.


The French routes from BOH seem odd, as I said back in June, but again Flybe have the buying history of the passengers in the region for ten years, they will know the prospects much better than most Pruners. And if Ryanair can make Carcassonne work year in year out from Bournemouth with a 189 seat 737, what do I know!


... and oh yes, if the Flybe CEO is worth his salt, he will have remembered from his past role, what the EZY analysis said for all these new city pairs.





FF

[kcockayne]

Flitefone

Good explanations. I will wait with baited breath for the outcome.

[Ayline]

Bird Strike

Hi there.

In a recent news article it was reported that a Flybe Q400 struck a bird seconds after take off from Guernsey. The bird caused damage to one of the engines which was shut down and the aircraft continued for the entire duration of the flight to Birmingham on one engine.

Access to maintenance facilities would no doubt have been a factor however I would welcome the thoughts from those with more knowledge on the subject than I have.

Thanks.

[Lord Spandex Masher]

Ayline, look here.

[Nakata77]

BOH-MAD, NCE, ABZ, EDI, BHD, IOM, MUC, VIE

Rather excitingly the booking engine and route map is now showing connecting services from Bournemouth to Madrid, Vienna, Munich, Lyon, Zurich, Nice, Guernsey, Edinburgh, Belfast, Inverness, Aberdeen, Isle of Man and a whole host of Scottish outlying destinations.

[adfly]

*didn't read Nakata77's post properly* Good to see!

[Cloud1]

Connections through MAN and CDG....