Flybe has reported “rapid progress” on an immediate action plan involving around 450 redundancies as it aims to lay the foundations for future growth.
The additional measures to slash the Exeter-based airline’s cost base were unveiled in November last year.
In an interim management statement today, Flybe told investors its turnaround plan was now accelerating and well advanced.
Chief executive Saad Hammad said: “We are on track to deliver £40m of annual cost savings from phases 1 and 2 of the turnaround plan by March 31, 2014, and significant rapid progress has been made already on the additional immediate actions announced in November last year.
“The transformation of our cost base is being successfully delivered thanks to the hard work and determination of our people and with the support of all stakeholders.
“Taking decisive action gives us a strong platform to implement our strategy, achieve profitable growth and build sustainable value for our shareholders. We are well on our way to becoming Europe’s best local airline.”
Trading during the third quarter of 2013/14 was said to be in line with management expectations, with UK scheduled revenue per seat up 2.3 per cent whilst costs per seat – excluding fuel and restructuring costs – were down 5.2 per cent.
In Finland, revenue from ‘white label’ flying increased by 23.7 per cent.
Job losses as a result of the action plan announced in November are now expected to total around 450 – fewer than the 500 originally proposed.
Work is continuing to reduce the cost of aircraft grounding, estimated at £14m this year plus a further £27m in 2014/15.
Flybe said its UK route network has now been successfully rationalised for the summer 2014 season, impacting on 55 out of last year’s 140 summer routes, including the discontinuation of 30 unprofitable routes. Routes cut include Exeter to Newcastle, Barcelona and Nice.
The airline’s UK base network will be reduced from 13 to seven by the end of March, with the closure of bases in Inverness, Aberdeen, Isle of Man, Newcastle, Jersey and Guernsey.
Flybe will continue to operate services to and from all of these airports, as part of a total of 119 routes being flown across its UK network in the 2014 summer season.
The company said: “The board believes that all these actions are essential to provide the business with a sustainable cost base and a platform upon which it can profitably grow its business in the future, as it implements the twin strategy, announced in November 2013, of being both a UK regional branded airline and a European regional white label provider.”
On the outlook for Flybe, the statement added: “The UK economy has returned to growth, although the aviation sector remains highly competitive.
“The board believes that Flybe’s strong position in the regional aviation market is an attractive and sustainable one that plays an important part in aviation connectivity for regions, airports, passengers and indeed other airlines. In the short-term, Flybe’s revenue will be affected as it discontinues unprofitable routes. However, the group’s improved cost structure will, the board believes, provide Flybe with a firm foundation for future profitable growth.”