Flybe plans to cut 500 more jobs after swinging to profit
(Reuters) - Flybe Group Plc (FLYB.L), operator of Europe's largest regional airline, said on Monday it would cut another 500 jobs, mainly in the UK, after deep cost cuts helped it post its first half-year profit in two years.
The company, which has already cut about 590 jobs this year, also said it would further reduce its routes, review its fleet mix, remove surplus capacity and improve aircraft and crew utilization.
"It was clear to me that the existing Phase 1 and 2 cost savings were necessary but we simply needed to do more and to do it immediately," Chief Executive Saad Hammad said in a statement.
Flybe said it had 2,700 employees as of end-September.
The airline will exit its slots at Gatwick airport by March 2014, reducing its London operations to just the few flights it runs out of Luton airport.
The company's shares rose as much as 28 percent to 87.40 pence, making the stock the top percentage gainer on the London Stock Exchange.
Up to Friday, the stock had lost more than three-quarters of its value since its listing in 2010 as the company struggled with soaring fuel costs, falling passenger numbers and higher airport charges.
Flybe, which counts British Airways parent IAG (ICAG.L) and billionaire investor George Soros among its top shareholders, reported a pretax profit of 13.8 million pounds ($22.1 million) for the six months ended September 30, compared with a loss of 1.6 million pounds a year earlier.
Revenue rose 20.4 percent to 477.3 million pounds.
Flybe said it expected to save 7 million pounds this year and 26 million pounds next year as a result of the latest restructuring moves.
It estimated one-off and surplus capacity costs of 14 million pounds this year and 27 million pounds in 2014-15.
"We would expect these surplus capacity costs to fall away as Flybe sells surplus owned aircraft and negotiates the early return of leased aircraft," Liberum Capital analyst Gerald Khoo wrote in a note.
"We have assumed the full benefit of the new restructuring measures will become evident in the year to March 2016."
Khoo said he expected a short-term impact from the new restructuring measures as capacity cuts could reduce passenger revenue.
($1 = 0.6252 British pounds)
(Reporting By Esha Vaish in Bangalore; Editing by Supriya Kurane and Don Sebastian)
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