Restructuring UK regional carrier Flybe has confirmed its deepening of losses after posting a a pre-tax loss of £40.7 million ($62.9 million) for the year to March 2013.
It marks a widening of losses from £6.2 million in the previous year. Pre-tax losses adjusted for restructuring and before capacity costs it is taking out of the business, deepened to £23.2 million. The wider losses came despite a 15% lift in revenues to £781.5 million. The carrier had already flagged the losses in outlining details of its restructuring plan last month.
Flybe chief executive Jim French says the losses while expected, are nonetheless disappointing. "During the year, we have taken difficult decisions as part of our turnaround plan, which have affected all our people. Challenging as they have been, these decisions were critical to ensuring the future success of Flybe," he says.
The carrier says it has outstripped its £25 million cost-savings target for the first phase of its turnaround plan, securing annual cost savings of £30 million for the current financial year. It has now begun work on the second phase of the programme which targets a further £10 million saving this year, rising to £20 million the following year to deliver combined annual savings of £50 million from 2014/15 onwards.
"In the last few months we have streamlined the business, reducing UK-based headcount by more than 20%. We have also made major progress in reducing the cost of our supplier base," says French.
Restructuring measures include cutting 490 jobs and reaching a preliminary deal with UK pilots body BALPA delivering a 5% cut in salaries.
It has also deferred delivery of 16 Embraer 175 regional jets to 2017-19, reducing its aircraft financing costs this year, and axed it Gatwick operations and agreed the sale of its slots to EasyJet. The carrier cited the impact of the UK's air passenger duty as key to it quitting its London operation.
"The plans being developed in Edinburgh, Cardiff and Belfast are aimed at reducing this burden, and bode well for our customers, the regional economies we serve and Flybe itself," says French.