Business

Troubled Flybe in takeover talks - but Belfast City base 'remains profitable'

Regional airline Flybe, the biggest operator at Belfast City Airport, is in talks about a possible sale
Gary McDonald Business Editor

SOURCES at Belfast City Airport say they are "unperturbed" that its largest customer Flybe is in fresh talks about a possible sale of the group, weeks after warning over profits.

The under-pressure regional airline is also looking at cutting further costs and flight capacity as it battles challenging conditions in the airline industry.

But it is understood Belfast remains a profitable base for Flybe, which carries around two thirds of all its passenger traffic.

The group says it is in talks with a number of "strategic operators" about a potential sale

And the Stobart Group, which already has a franchise agreement with Flybe, is back in the frame as a possible buyer, despite having failed to agree terms in a previous takeover attempt in March.

Yesterday's widely-anticipated move comes weeks after Flybe warned over profits following falling demand and a £29 million hit from rising fuel costs and the weak pound.

That prompted a flurry of activity on the stock markets, and on one day alone last week, around 20 million shares were traded, representing more than 9 per cent of the company, including a single trade of 2.5 million shares.

Indeed nearly 75 per cent has been wiped off its stock market value since December, although its stock recovered some ground yesterday after news of its sale plans.

Following that Flybe profit warning, data firm Aviation Analytics looked at the carrier's top 20 bases (by weekly departures), ranked by average fare for the 12 months to September, and colour-coded it by its estimate of profitability.

In its measure, Belfast City (coded as BHD) comes out in the middle, with its profit-per-seat "marginal".

In September Flybe marked 35 years operating from George Best Belfast City Airport.

Originating as an air-taxi company owned by a family-run steel company C Walker & Sons, Spacegrand Aviation as it was known then, made its first official flight to Belfast Harbour Airport from Blackpool in 1983.

A few months later Walkers Steel Group bought over Jersey European Airways and the airline began commercial activity from Belfast.

From those early days of 19-seater Twin Otter aircraft and limited destinations Flybe has grown and evolved alongside Belfast City Airport to offer more than 250 flights per week to 15 destinations across the UK using a core fleet of Bombardier Q400 aircraft.

But last month Flybe revealed that is was scrapping its Belfast City to Liverpool service from December 31 due to what is admitted were "passenger numbers remaining below sustainable projections, with no sign of this improving despite very competitive pricing".

In half-year results also announced yesterday, Flybe saw cost-cutting help lift underlying pre-tax profits to £9.9 million from £9.2 million a year earlier.

Statutory pre-tax profits for the six months to September 30 more than halved to £7.4 million from £16.1 million a year earlier.

But passenger numbers edged 0.6 per cent higher to 5.2 million.

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