Daily Telegraph recently1 Nov 2018 13:27
Just had this two week old article pointed out to me. Sums it up nicely.
"Turbulence at troubled Flybe may end in a crash landing".
‘Faster than road or rail”. Congratulations to Flybe for possibly the most uninspiring corporate strapline of all time. With aspirations as modest as that perhaps it is no surprise that the airline seems locked in a tailspin.
The troubled regional carrier has issued yet another profit warning, its second this year and the fourth since Christine Ourmières-Widener took charge at the start of 2017. Good luck counting how many have been made since its botched float eight years ago. No wonder the shares crashed by as more than 40pc yesterday. Back in June, she was insisting that operations have “significantly improved”. And as recently as August, the chief executive told one newspaper that the airline was on course to break even. Fast forward just two months, and Flybe is pencilling in a full-year pre-tax loss of £12m compared to a forecast from one analyst of £7m profit. Investors must be livid. Its share price is now at an all-time low of 18.88p, versus a float price of 295p, making it one of the most disastrous public listings ever. And the list of excuses only gets bigger. Ourmières-Widener has previously blamed falling profits on the need to spend money to boost its internet offering, and “unforeseen” costs in operating its fleet of turboprop planes. In April, the company announced that £4m had been wiped off its bottom line. The main culprit on this occasion was the Beast from the East and spiralling cancellations. This time it is rising fuel costs, currency moves and weakening customer demand to blame for an incredible £19m swing between the top end of brokers’ predictions and the sudden downgraded outlook. It’s a surprise management didn’t throw in the royal wedding and the World Cup for good measure. Ourmières-Widener has talked of Flybe having “massive potential” but on current form that looks fanciful. Sure, load factors – the number of seats filled per flight – and revenue per seat are improving, but its all painfully slow going. And despite cutting less-profitable routes, and reducing its reliance on costly leased aircraft, the fortunes of the Exeter-based company look to be deteriorating rather than improving. After all, Virgin’s swoop on the UK domestic market with its “Little Red” venture lasted all but two years.
Then there is the matter of Flybe’s stretched balance sheet. The company was forced to tap shareholders for £155m at 110p in 2014 because it only had a few days worth of cash left. At the time, it promised shareholders that an “exciting phase” beckoned. That was true but only in the same way that it is exciting when a plane nosedives into the ground. With £60m of debt – roughly the same as its current stock market value – the risk of another emergency fundraising must be increasing. It will take Dan Dare-like heroics to persuade investors to cough up again.
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