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Flybe up for sale weeks after profit warning | Flybe up for sale weeks after profit warning |
(35 minutes later) | |
Flybe has put itself up for sale, just weeks after issuing a profit warning. | Flybe has put itself up for sale, just weeks after issuing a profit warning. |
The Exeter-based regional airline's board confirmed it was "in discussions with a number of strategic operators about a potential sale of the company". | The Exeter-based regional airline's board confirmed it was "in discussions with a number of strategic operators about a potential sale of the company". |
Flybe said it was also reviewing other "strategic options", including cutting more flights in the face of challenges. | |
A spokesman for the airline said there was no threat to tickets and flights that had already been purchased as a result of the review. | |
Last month, the airline warned full-year losses would be £22m, blaming falling consumer demand, a weaker pound and higher fuel costs. | Last month, the airline warned full-year losses would be £22m, blaming falling consumer demand, a weaker pound and higher fuel costs. |
Latest results, published on Wednesday, show that pre-tax profits for the six months to 30 September fell by 54% to £7.4m, on revenues down by 2.4% to £419.2m. | Latest results, published on Wednesday, show that pre-tax profits for the six months to 30 September fell by 54% to £7.4m, on revenues down by 2.4% to £419.2m. |
The airline's shares have fallen by almost 75% since September. | The airline's shares have fallen by almost 75% since September. |
The Exeter-based airline is now valued at about £25m, far below the £215m it was valued at when it floated on the stock exchange in 2010. | The Exeter-based airline is now valued at about £25m, far below the £215m it was valued at when it floated on the stock exchange in 2010. |
However, following the announcement of the review, shares leapt by 37%. | |
Stobart Group - which pulled out of a bid to buy Flybe earlier this year after the airline rejected its offer - could be a possible purchaser, according to Sky News. | Stobart Group - which pulled out of a bid to buy Flybe earlier this year after the airline rejected its offer - could be a possible purchaser, according to Sky News. |
Flybe, whose roots date back to 1979, has 78 planes operating from smaller airports such as London City, Southampton and Norwich to destinations in the UK and Europe. | Flybe, whose roots date back to 1979, has 78 planes operating from smaller airports such as London City, Southampton and Norwich to destinations in the UK and Europe. |
Analysis: By Dominic O'Connell, Today business presenter | |
Flybe says its decision to put itself up for sale is due to the "current challenges" it faces - higher fuel prices, uncertain demand and a weaker pound. | |
In truth, those problems are just the icing on the cake. The sale is in reality the culmination of a series of management missteps over the last decade as the company struggled to find a profitable niche. | |
It was squeezed from below by smaller, more nimble rivals, and from above by the likes of EasyJet and Ryanair. | |
Flybe has tried new aircraft - Embraer jets that eventually had to be got rid of at immense cost - and new routes - forays away from its regional base to Heathrow and London City airports - without ever finding the magic formula that would let it survive as an independent airline. | |
All the while, cash has flowed out the door. Today's half-year results show a net outflow of more than £30m, leaving the company with just £52.4m in cash reserves. | |
The accounts show that credit card acquirers, vital trade partners for airlines, are asking for more security. They also reveal departures of senior management: Vincent Hodder, head of strategy, and Peter Hauptvogel, the chief information officer, have recently left. | |
All these management mistakes have been funded by Flybe's long-suffering shareholders. It floated in 2010 at 295p a share and raised £150m from investors in 2014. The shares currently trade at 11p. | |
It serves about eight million passengers a year, but has been struggling to recover from a costly IT overhaul and has been trying to reduce costs. | It serves about eight million passengers a year, but has been struggling to recover from a costly IT overhaul and has been trying to reduce costs. |
Last month, Flybe's chief executive, Christine Ourmieres-Widener, said it was reviewing "further capacity and cost-saving measures". | Last month, Flybe's chief executive, Christine Ourmieres-Widener, said it was reviewing "further capacity and cost-saving measures". |
"Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months, particularly against the headwinds of currency and fuel costs," she said at the time. | "Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months, particularly against the headwinds of currency and fuel costs," she said at the time. |