Flybe axes jobs and cuts costs to stem losses

Marion Dakers

ONAL airline Flybe is cutting 300 jobs as part of its plan to stem losses by saving £35m a year.

The carrier, which has been hit hard by falling profitability on its short-haul flights, said 20 per cent of its management will be cut, while executive directors are forfeiting one month’s wages this year as part of its bid to turn around the business.

One in ten UK staff are expected to lose their jobs once talks with workers and unions are complete. Flybe said it currently loses £1.30 per seat, which it hopes to improve to breakeven next year and eventually to a £3 per seat profit over the next three to five years.

It will spend £10m to £12m on its restructuring this year, and outsource its call centre, ground handling and possibly its maintenance work to save £35m a year by 2014-15.

The Exeter-based airline will also beef up its European contract flying unit, though it said the UK will remain “the engine room of the business”. It will decide whether to alter its routes later in the year.

Chief financial officer Andrew Knuckey blamed some of the airline’s problems on the UK’s air passenger duty (APD), levied on customers either taking off or arriving in the country.

“I’m not saying every challenge this airline faces is down to the government… but 75 per cent of our passengers are domestic passengers, and these passengers pay tax both ways.”

Chief executive Jim French suggested employees could write to the government on the matter, and believes APD could be cut at regional airports by charging more in London.

The airline estimates that 18 per cent of its UK ticket revenues is eaten up by APD, or £68m this year, compared to around six per cent at rival carriers.