An uncertain future for Flybe - Entrepreneur Generations

Flybe is for sale:
Futures Forum: Brexit: and Flybe for sale

Meanwhile, there have been lots of reports from the FT:
EasyJet and Stobart consider buying Flybe
Top investors continue to dump Flybe shares
Investors worry over health of UK aviation industry

Devon Live reports today:

Could EasyJet be on the verge of buying Flybe?

Five reasons why Flybe is struggling to make money

1. Passengers are feeling the pinch

Just like the high street, Flybe is at the mercy of the consumer. It means things like the 'Beast from the East' or Storm Callum puts people off flying or means flights are cancelled. And if consumers are losing jobs or feeling the pinch because of rising household bills, the first thing to drop off the budget is a trip abroad.

2. Brexit

The risks associated with Brexit and what regulation will look like for the aviation industry is a worry. Will there be additional tariffs and visas to think about. Air passenger duty continues to concern airlines - especially Flybe which has a lot of routes and partnerships with other airlines in mainland Europe.

3. Cost of fuel and the impact of the dollar

Car drivers will sympathise with this one. Flybe buys its fuel in dollars and the average market price in US Dollar was up 19.1% at $560.

Currency is a changeable beast and policy makers like President Trump can and does affect the price.

4. Planes are expensive

Capital investment from the outset is high and Flybe has been reducing the number of planes it has from a peak of 85 in May last year to ensure that they are running at peak profitability. It needs to make sure that its planes are full to be most efficient. It is also cancelling its unprofitable routes.

Aviation is heavily regulated and the airline spends a lot on maintenance.

It has also overhauled its IT and digital systems to make sure that customers can book their flights on their mobile devices.

5. Flybe is a small company

Flybe may be one of the region's biggest players but it is small compared to the likes of its competitors Easyjet, Ryanair and BA. It means that the back room costs take up a higher proportion of its outlay. It costs about the same to pay for things like maintenance, HR and online bookings for 200 planes as it would for 80, for example.

Could EasyJet be on the verge of buying Flybe?.
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from Futures Forum https://ift.tt/2RXuBO2 An uncertain future for Flybe - Entrepreneur Generations

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