Flybe sells Gatwick slots to easyJet, slams airport for 'punitive' fees

easyJet has bought all of Flybe's take-off and landing slots at London Gatwick airport as part of the latter's turnaround plan to return to profitability.

easyJet has bought all of Flybe's take-off and landing slots at London Gatwick airport as part of the latter's turnaround plan to return to profitability.

The airlines confirmed on Thursday that they have completed an agreement to exchange 25 pairs of arrival and departure slots for £20m. easyJet said that the slots will allow it to provide "additional frequencies on popular existing routes from Gatwick as well as add new destinations across the UK and Europe".

Flybe meanwhile said that it had taken the "very difficult decision" to exit Gatwick from March of next year due to the airport's above-inflation rises in landing fees.

"No business can swallow cost increases of more than 100% over five years and Flybe simply cannot bear such punitive rises," said Chief Executive Officer Jim French.

"When you add to these cost increases the government's policy of charging Air Passenger Duty (APD) on both legs of a domestic flight, I'm afraid it's inevitable that high frequency services from the UK's regions will be squeezed out of Gatwick, as they have been from Heathrow."

The company is to continue offering over 150 routes on its regional network through airports in Manchester, Southampton, Birmingham, Glasgow, Edinburgh, Amsterdam and Paris.

"Gatwick airport may not want those connecting passengers, but others do. We will work with our airports to ensure the UK's regional passengers don't get left in the cold," French said.

A return to profitabilityFlybe updated the market on its 'Delivery and Future Direction' plan, a cost-cutting programme designed to provide the firm with a "solid base for the future development of the business".

The company has so far exceeded its intended 'Phase 1' savings of £25m and is now targeting £30m of annual cost savings for its 2013/14 fiscal year. These savings have come by way of a 22% reduction in its staff from 2,730 to 2,140, as well as outsourcing projects and reductions in supplier costs.

'Phase 2' is already being implemented and targets a further £12m of savings this year and an annual run rate of £23m thereafter, with a further 80 employees to lose their jobs as well as other cost savings.

Flybe stressed that its turnaround plan is being financed "without recourse to shareholders" and said that the measures being taken should help its break-even on a profit-per-seat basis in the first year. In the medium term, the company expects to make a £3.00 profit per seat.

Another significant transaction for the firm has been the agreement with Brazilian aerospace group Embraer to defer 16 new E175 aircraft due for delivery as early as next year until 2017-2019. This will cut Flybe's pre-delivery payment commitments in the winter 2013/14 season by £20m.

Recommended

HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022
How to be better at selling stocks
Investment strategy

How to be better at selling stocks

There is plenty of advice around about buying stocks, but not so much about when you should sell. John Stepek explains the two key things to know abou…
14 Jan 2022
Share tips of the week – 14 January
Share tips

Share tips of the week – 14 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Jan 2022
Fintech: how to profit as technology transforms banking around the world
Share tips

Fintech: how to profit as technology transforms banking around the world

Financial technology – from apps to APIs to the cloud – is rapidly transforming financial services. This will spell doom for some incumbent firms, whi…
14 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Tech stocks teeter as US Treasury bond yields rise
Tech stocks

Tech stocks teeter as US Treasury bond yields rise

The realisation that central banks are about to tighten their monetary policies caused a sell-off in the tech-heavy Nasdaq stock index and the biggest…
14 Jan 2022