Flybe Group Regulatory News (FLYB)

Flybe Group plc

("Flybe" or "the Company")

FLYBE ANNOUNCES BREAKTHROUGH AIRCRAFT agreementS to address major legacy fleet commitment and secure right-sizeD aircraft for futurE GROWTH

Flybe is pleased to announce a significant step towards resolving its legacy fleet commitments and securing the right aircraft for its future development with a set of linked agreements between Flybe, Republic Airways Holdings Inc. and Embraer SA.

In July 2010 Flybe announced a $1.3bn firm order with Embraer SA for thirty five Embraer E175 88-seat regional jets, with deliveries originally scheduled to complete by March 2017. To date, eleven of these aircraft have been delivered to Flybe and last year the deliveries of the remaining twenty four were rescheduled to a four-year period from October 2015. The new agreements relate to these remaining twenty four E175s as well as twenty four Q400s currently operated by Republic Airways. These agreements are in line with Flybe's strategy announced after the strategic review last year of flying thin regional routes, unservable by mainstream airlines with larger aircraft and seat capacity.

Under the terms of the agreements:

· Flybe and Embraer will terminate twenty E175s from Flybe's firm order backlog of twenty four E175s. In a separate agreement between Republic and Embraer, Republic will purchase fifty E175s.

· Flybe has agreed with Republic to sublease twenty four 71-seat Bombardier Q400 turboprop aircraft, with deliveries commencing in March 2015 and spread over a two year period.

· Embraer has agreed to defer delivery of Flybe's firm order of four remaining E175s until 2018, in line with Flybe current fleet planning needs.

The Q400 aircraft being sub-leased by Flybe have an average age of 5.4 years and will have an average sub-lease period of 4.6 years at March 2015. Their delivery schedule fits Flybe's fleet replacement and growth profile as twenty one Bombardier Q400s from the existing Flybe fleet come to the end of their lease periods over the next four years.

This intake of Q400s from Republic will make Flybe the largest Bombardier Q400 operator in the world.

Saad Hammad, Chief Executive Officer, commented:

"We are committed to flying the right aircraft on the right routes. The agreements between Flybe, Republic Airways and Embraer bring more than just an ability to keep to that commitment. With the substitution of twenty E175 future deliveries by young and attractively priced Bombardier Q400s, our core UK branded fleet is now right sized to our capacity growth and aircraft renewal plans at a net cost broadly in line with our expectations.

"Flybe continues to value its close partnership with Embraer. Our current fleet of E175s are popular and reliable aircraft and will remain a valued part of our fleet, providing efficient and cost effective services on our longer sectors.

"Let us be clear, there is more to do. But these landmark agreements are a significant step towards resolving all our legacy fleet issues and enable us to implement our strategy of connecting regions more effectively."

17 September 2014

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