Flybe blames tax as 100 jobs lost in city
ALMOST 100 staff at Flybe's Exeter headquarters are losing their jobs, the airline has revealed.
And around 300 redundancies are being made across the country as the company battles to return to profit. Flybe has revealed that 10 per cent of its UK workforce – including 20 per cent of its management – are being made redundant.
The company blamed a "brutal" rise in air passenger duty and a 20 per cent decline in UK passenger numbers over the last six years for the job losses.
Flybe says the move will save it up to £35m a year and will result in a new "slimline" model for the business.
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The airline is also reviewing the potential to outsource a variety of support functions.
Some 60 staff recently transferred from Flybe's call centre to a company in the city centre.
No changes are planned to Flybe's current route network.
The airline, based at Exeter Airport, is currently one of the city's biggest employers. In a statement released to the stock exchange, the company said: "Given that the airline is headquartered in Exeter, the numbers of staff impacted there represent the largest of any Flybe location.
"The proposed redundancies in Exeter, following consultation, are expected to be in the region of 95 jobs."
Business leaders reacted with disappointment to the announcement.
Tim Jones, chairman of the Heart of the South West Local Enterprise Partnership, said: "Clearly any job losses are bad news, particularly at such a successful company as Flybe.
"But I don't see this as a reason to panic. Flybe has proved incredibly adept at finding new markets and making adjustments to ensure they are successful in the long term, and that's what we need for the good of the Exeter economy."
Flybe's chief executive Jim French said: "It is a matter of great regret that many valued and hard-working colleagues may leave the organisation, particularly in Exeter where Flybe is a mainstay of the South West's economy, and it was a decision I and the board have not taken lightly. It is one we have tried to avoid and it is the first time in almost 30 years of business that we have had to take such action.
"However, faced with the brutal impact of a 160 per cent rise in air passenger duty over the past six years and the consequent 20 per cent decline in domestic traffic over the same period, we have to recalibrate the business."
Under the turnaround plan, Flybe UK is targeting a profit of £3 per seat within three to five years, while growing profits from its outsourcing activities for other businesses, including the aircraft maintenance and training carried out at its Exeter base.
Mr French added: "Today's announcement is a clear indication that Flybe has a plan not only to address the challenges we face, but also one to exploit the opportunities available, particularly in Europe."
He said there was "no escape" from the £68m annual air passenger duty tax burden which Flybe has to pay – accounting for more than 18 per cent of its ticket revenues.
Mr French added: "I am proud that Flybe is headquartered in Exeter, but recognising that any significant change to either the UK economy or the redistribution of APD is likely to be some way off, today's announcement represents a clear and realistic plan with a measurable timescale and benchmarks, based upon significant restructuring and cost reduction to return Flybe to profitability."
Flybe hits out at CAA over Gatwick fees hike – See page 74
2 Comments
by davyth1
Sunday, January 27 2013, 2:24AM
“Flybe UK are far more exposed to APD than both Ryanair and easyJet - as a higher proportion of their network is UK domestic flights where people pay APD twice. Ryanair and easyJet different business models and with more flights between UK and mainland Europe, Ireland and North Africa (where passengers only pay UK APD once) and also flights which do not touch the UK at all - so no UK APD.
Flybe focused on regional UK flights with smaller margins and passenger numbers on routes that the other two airlines would struggle to fill their larger aircraft.
APD has had an enormous inpact on UK domestic flights and smaller regional airports. To say that it has had no impact would be naive. Look at the numbers of people from Northern Ireland who fly from Dublin to avoid the tax. APD needs to be reformed urgently - a one size fits all tax does not work and is totally conterproductive.”
by FromMendip
Saturday, January 26 2013, 7:03PM
“And yet easyJet and Ryanair go from strength to strength. They encounter the same APD and would like its reduction or abolition but still manage to cope with it. easyJet's share price has doubled over the past 12 months to its highest ever, whereas Flybe's has been an unmitigated disaster since its flotation just over two years ago - it's down over 80 per cent on its flotation price.”