The new CEO of flybe has wasted no time in doing what all new CEO’s at struggling companies must do; rubbishing the previous management. To be fair, he has been at pains to point out their achievements in growing the airline and floating it on the stockmarket but he makes no bones about the fact that the airline has been poorly run in recent years.
Depending on how you look at it, the flotation of flybe was a remarkable triumph. I cannot have been the only person to have been deeply sceptical about the up-beat tone of the prospectus, nor was I surprised when the airline was forced to issue the first of five profit warnings. The shares were floated at 295p and touched 49p at one point (they are a “relatively healthy” 103p at the moment).
The airline has recovered some ground under the new management through the usual cost-savings, route closures and the one-off sale of valuable slots at Gatwick. All this is fine, but it won’t bring the airline back to long-term profitability.
In an interview, Saad Hammad, the new CEO, pointed out that of 158 routes flown by flybe, 61 did not even cover their fixed costs. He also compared aircraft utilisation and hours spent flying by pilots with easyJet (for whom he worked at one stage). EasyJet fly their aircraft for more hours a day and their pilots fly an average of 813 hours a year compared to just 374 at flybe.
This is all very well but Mr Hammad surely knows he is not comparing like with like. An aircraft and crew shuttling between Southampton and Jersey will have far fewer hours in the air each day than one flying from Gatwick to Sharm el Sheikh.
Flybe is a regional carrier, not a large-scale budget carrier like easyJet – and that is the problem.
Longhaul airlines can make money, budget airlines flying high density routes can make money but regional airlines nearly always struggle. In fact, it is hard to think of any regional airlines that make money, without the active support (or subsidy) of a larger carrier who uses them as a feeder.
Flybe is a very useful airline for many people. If you want to get from one end of the country to another, they might be the only viable option. Were flybe to disappear, it is unlikely other airlines would jump in to take over all their routes. Maybe Mr Hammad has some secret recipe to make the airline profitable but he might consider using an ad campaign run by Air Inter a few years ago when it was struggling with its large French domestic network. The tagline was simple – use us, or lose us.