Reuters: Hot Stocks: UPDATE 1-Flybe axes 300 jobs to revamp UK business

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UPDATE 1-Flybe axes 300 jobs to revamp UK business Jan 23rd 2013, 10:26 Wed Jan 23, 2013 5:26am EST * Cuts 20 pct management posts, 10 pct overhead, production roles in UK * Aims to break even at Flybe UK in FY 2014 * Stands by rev growth forecast of up to 2 pct for full year * Flybe UK reports 3 pct growth in passengers, flat rev per seat in Q3 (Adds analyst comment, details, background; updates share movement) By Brenton Cordeiro Jan 23 (Reuters) - British carrier Flybe Group Plc said it would cut about 300 jobs, or about 10 percent of its UK workforce, joining other European airlines that have cut costs and headcount to cope with lower spending on air travel amid the euro zone debt crisis. Flybe shares fell as much as 7 percent on Wednesday morning on the London Stock Exchange. They were down 5 percent at 47.38 pence at 1025 GMT. The job cuts include a 20 percent reduction in management posts and about 10 percent of overhead and production roles, Flybe, Europe's largest regional airline, said. Several European carriers including Scandinavian company SAS , Germany's Lufthansa, Franco-Dutch airline Air France-KLM and International Airlines Group -owned Iberia and British Airways have already cut thousands of jobs. Flybe expects its UK business, which swung to a pretax loss of 2.2 million pounds ($3.49 million) in fiscal year 2012, to break even in the fiscal year ending March 2014. Flybe UK's number of passengers rose 3 percent to 1.7 million in the third quarter. But passenger revenue per seat was largely flat at 47.39 pounds. The UK business brought in about 96 percent of group revenue last year and serves over 70 airports in the UK and several European countries. It has a joint venture with Finnair and contract flying arrangements with Brussels Airlines and Olympic Air. Flybe said it did not expect to close any of its 13 UK operational bases but was implementing cost reduction plans with suppliers such as airports and maintenance providers, rolling out fuel efficiency programmes and expanding automation at the check-in process. "Persistent losses were unsustainable and needed tackling in our view ... however, much will depend on the delivery of these targets and it is obviously still early days," Oriel Securities' Edward Stanford said. "Assuming management is successful we believe that there is now limited downside risk to the share price." Flybe estimated the job cuts to result in restructuring costs of between 10 million pounds and 12 million pounds ($15.9 million to $19 million), with the majority to be recorded in the current fiscal year that ends on March 31. It reiterated its forecast of year-on-year revenue growth of up to 2 percent. ($1 = 0.6302 British pounds) (Reporting by Brenton Cordeiro in Bangalore; Editing by Don Sebastian) Link this Share this Digg this Email Reprints

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