Flybe Group Plc (FLYB), Europe’s largest independent regional airline, said new Chief Executive Officer Saad Hammad will seek to pare routes, close bases and cut additional jobs to boost a turnaround program he inherited.
About 500 more jobs will be cut to deliver 7 million pounds ($9 million) in savings this year, with 26 million pounds in annual savings from 2014, the Exeter, England-based company said in a statement today. Management previously targeted 40 million pounds of savings in fiscal year 2014.
Hammad, who joined the airline in August, has overseen a sweeping staff overhaul that culminated with the departure of his predecessor, Jim French, a 23-year veteran who last served as chairman. The company in June already increased cost cutting goals once to rebuild its financial health.
“We simply needed to do more and to do it immediately,” Hammad said in the statement. “Most of the immediate actions are completed, being implemented or already being consulted on.”
Britain’s biggest domestic airline is seeking to bolster its balance sheet amid reduced demand and high fuel prices.
Under the expanded plan, the airline will incur 5 million pounds in one-time costs this year and have 9 million pounds in excess capacity, which will grow to 27 million pounds next year. This will drop “significantly” thereafter, it said.
The mix of aircraft the regional carrier flies will also be reviewed, it said. The airline operates 57 Bombardier Q400 turbo-propeller planes and 14 E195’s made by Brazil’s Embraer SA. (EMBR3) Flybe is seeking cost reductions in talks with aircraftmakers and leasing companies, it said.
The move follows a decision in September to disband Flybe U.K. and Flybe Outsourcing Solutions and merge them into an integrated entity. In May, the company agreed to sell take-off and landing slots at London’s Gatwick airport to EasyJet for 20 million pounds to boost capital.
Flybe announced the changes with its half-year results. The company reported pretax profit of 13.8 million pounds, compared with a 1.6 million-pound loss in the year-earlier period. Sales advanced 20 percent to 477.3 million pounds.
“The economic environment continues to be challenging,” Flybe said.
Flybe shares have advanced 34 percent this year after falling more than 85 percent since early 2011. The company is valued at 51 million pounds.
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