The past year "marks the rebirth of Flybe", says chief executive Saad Hammad, referring to the stricken budget airline's return to profitability after a year of hard cost-cutting and rebranding. Flybe (FLYB) first announced its turnaround plans in January 2013, and reiterated the plan in May before "immediate actions" were enforced in November last year by the newly arrived Mr Hammad, a former executive at easyJet (EZJ).
These actions involved cutting 1,100 staff, dropping fares and reducing the number of aircraft bases from 13 to seven. Annual cost savings of £47m were duly booked in 2013-14, while a further £71m should be removed from the cost structure this fiscal year.
But cutting costs is just half the story. A £150m fundraising in March 2014 is helping Flybe overhaul its brand and marketing strategy. While 30 summer routes were culled, five new routes from London City airport and a new franchising agreement with Stobart (STOB) at Southend airport should keep Flybe’s passenger numbers up. Last year these grew 7 per cent to a record 7.7m.
Broker Liberum has upgraded its 2014-15 pre-tax profit estimate by 43 per cent to £6.6m, giving EPS of 2.4p.
FLYBE (FLYB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 140p | MARKET VALUE: | £303m | |
| TOUCH: | 139-140p | 12-MONTH HIGH: | 151p | LOW: 39p |
| DIVIDEND YIELD: | nil | PE RATIO: | 15 | |
| NET ASSET VALUE: | 90p | NET CASH: | £117m* | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 571 | 24.6 | 42.0 | nil |
| 2011 | 596 | -4.3 | 6.4 | nil |
| 2012 | 615 | -6.2 | -8.5 | nil |
| 2013 | 614 | -41.1 | -56.0 | nil |
| 2014 | 621 | 8.1 | 9.6 | nil |
| % change | +1 | +120 | +117 | - |
Ex-div: na Payment: na *Includes £34m of restricted cash | ||||
