Flybe Adds London City Flights to Dublin, Edinburgh, Belfast

Flybe Group Plc, Europe’s largest independent regional airline, will add routes between London City Airport and destinations in the U.K. and Ireland in a push to attract business travelers.

Flybe will deploy five Bombardier Inc. Q400 planes to serve Edinburgh and Dublin four times daily, Belfast and Exeter three times a day and Inverness twice daily, the carrier said today. The services starting Oct. 27 will attract about 500,000 passengers a year, and routes to skiing regions and other vacation destinations in France and Spain will follow.

Flybe plans to tap clients from London’s City and Canary Wharf financial districts by offering services from an airport quicker to reach than Heathrow. Flybe now serves London’s Gatwick, Stansted and Southend airports, and last month raised 150 million pounds ($252 million) in a share placement.

“We are delighted to re-enter the London market at London’s most convenient airport following a rigorous profitability analysis utilizing our strict route assessment model,” Flybe Chief Executive Officer Saad Hammad said in the statement.

Flybe shares rose as much as 5.2 percent and were up 3.9 percent at 140.25 pence at 12:39 p.m. in London. The stock has more than tripled in 12 months, valuing the carrier at 304 million pounds.

Culled Routes

“We’ve dealt with all the problem routes we have had,” Hammad said in a telephone interview. “We have culled 30 routes and changed frequency and/or aircraft gauge on another 25 routes, so we have addressed all the underperformance in the network for this summer to make sure we are in a good position going forward.”

Flybe said in November that 61 of the 158 routes it had at the time didn’t cover operating costs. The airline plans to better utilize its fleet and reduce costs by about 50 million pounds in the fiscal year through March 2015, with measures including outsourcing of maintenance and ground handling, as well as about 500 job cuts, or one in five positions in the U.K.

Hammad said negotiations continue over which holiday destinations will be served from London City, while the five new aircraft will spend the majority of flying time carrying business travelers. The leisure destinations will be announced within three weeks, he said.

London City is “poised for significant growth,” with 120,000 takeoffs and landings planned by 2023, handling 6 million passengers, Declan Collier, CEO of the airport, said in the statement. The airport served 3.4 million people in 2013. The Flybe agreement with London City is for five years.

Ownership Change

Located 6 miles from London’s main financial district, the airport opened in 1987 and was acquired by American International Group Inc. and Global Infrastructure Partners in

2006. The insurer exited in 2008, leaving GIP as the majority owner and Highstar Capital with a 25 percent stake.

Built on a former dockside in the River Thames, City’s 1,199-meter (3,934-foot) runway, together with noise restrictions, means aircraft must be able to make steep descents and takeoffs, limiting planes deployed to regional aircraft including various turboprops, the BAE Systems Plc 146, and Airbus Group NV’s smallest A318 airliner.

Flybe is “totally on plan” for cost cutting and consulting with unions and employees about proposed redundancies, Hammad said. Air France-KLM Group’s sale of its CityJet regional arm shows the desire of European flag carriers to exit the regional segment, which provides opportunities for Flybe, he said.

As of September, the company had a fleet of 68 Bombardier turboprops and Embraer SA regional jets in the U.K., and 28 Embraer and ATR turboprops at its Finland unit for a total fleet of 96 aircraft.

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