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Is Flybe to be taken over by Stobart Group?

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Flybe‘s share price jumped on Friday after Stobart Group announced that it was considering a bid for the company.

Flybe – which uses Avios as its reward currency – has been struggling in recent years, despite carrying 8m passengers per annum and operating more UK domestic flights than any other airline.

Stobart Group to buy Flybe

The share price was 295p at the time of the 2010 IPO but has since lost 85% of its value and now has a market cap of just £100m.  British Airways, which acquired a stake in the company as part-payment for the BA Connect regional operation, sold down its shares a number of years ago.

The company was arguably a dead duck from the point in 2014 when it was forced to sell its Gatwick slots to easyJet in order to raise cash.

Stobart Group already operates Flybe flights under a franchise deal from the Isle of Man and London Southend, which it owns.  It is also likely to use the brand for services from Carlisle Lake District airport which Stobart to about to re-open to passenger flights.

Under Stock Exchange rules, Stobart Group has until 22nd March to make a formal takeover offer.

Comments (80)

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  • Ian says:

    I would assume the BA cost increase is the cost of strike action… how much they had to pay Qatar

    • Rob says:

      Given Qatar’s low costs I doubt it was much more than they saved by not paying striking crew.

      • Catalan says:

        But major costs would have been incurred from crew costs such as hotel accommodation and crew allowances for the Qatar crew whilst based in London, during the strike periods.

        • Rob says:

          Peanuts in terms of the cost base of an airline, I promise you. (And Qatar owns its own hotel now at Heathrow!) Irrespective, if you cause a strike which has a net cost to you then it wasn’t a very good idea to cause the strike in the first place ….

          Anyway, the good news is that all Cabin Service Directors on short haul are to be made redundant with the top role now being Purser. Another few quid saved at the expense of losing literally the most experienced cabin crew members.

        • PM says:

          I would agree with Catalan here. Moreover, Qatar might have had these planes standing by, but BA was really in need to have them and on short notice there was little other choice.
          Qatar probably asked for a good premium. And then again, the mixed fleet is getting paid £13k per annum base and a few more for flying, hardly much more expensive than Qatar staff could be…

        • RIccatti says:

          — Anyway, the good news is that all Cabin Service Directors on short haul are to be made redundant with the top role now being Purser. Another few quid saved at the expense of losing literally the most experienced cabin crew members.

          That is quite crazy, especially if they are talking redundancy. Sometimes, the only pleasant people on the plane are CSDs but I did notice they stopped recognition for BA Gold members, no one approaches you with a personal greeting anymore. AA and Cathay have a protocol that the crew knows Emerald elites’ names when serving them, even in economy.

        • Edgar says:

          “Irrespective, if you cause a strike which has a net cost to you then it wasn’t a very good idea to cause the strike in the first place ….”

          I think this is a very naive comment. Having increased costs for a quarter, or even a year to save future costs into perpetuity is the reason most companies will tolerate short-term strike action

        • RussellH says:

          From an employee point of view, it is only ever worth striking if the action will cost the commpany more than it costs the strikers.
          I do not know if it is still legal, but Italians had developed the 15 minute strike to a fine art last century. Earned lots of publicity, disrupted the company, but caused the general public little or no inconvenience and only cost 15 mins worth of pay.
          Trouble is, strikes these days no longer hit the right people. 200 years ago all businesses just about were owned and run by the same people. Striking mill workers meant that the mill owners suffered directly.
          What is needed is some way to make industrial action not hit the general public, but cause maximum unpleasantness to the likes of Alex Cruz.
          As a former TU Rep, I have been thinking about this for years, but never come up with a solution. But maybe some of the really clever people here might have some good ideas?

        • RussellH says:

          > all Cabin Service Directors on short haul are to be made redundant

          Ah, yes, always a good idea to get rid of the staff who really know what they doing and how to do it. All that knowledge and experience is really expensive, and we just cannot afford it any longer. Surely there are plenty of19 year olds out there who could do just as good a job, and their minimum wage costs are so much less than those of older people too.

          Oh b*****! We have got rid of the staff who knew what they were doing, but the CAA insists that we spend money traning these new staff. Do they think we are made of money??

          😉

    • Kristopher Kemp says:

      On my flight back from Hamburg a couple of weeks ago the CSD came through the flight greeting all the Gold exec members made a nice change… I thought they might be bring it back in…

  • shd says:

    First thought: those pillows are bloody expensive

    Second thought: couldn’t happen to a nicer company!

    PS well done to Rob for not bringing LHR APD into it 😉

  • shd says:

    LHR UB, even …

  • Roger says:

    Any QR promo codes?

  • callum says:

    It doesn’t really “come to nothing” – maybe the CASK would have risen by more than 4.7% without the cost cutting.

    • David says:

      Or less – the Bank Holiday IT Meltdown must have added a bit of cost, which might never have happened with reasonable contingencies in place.

      • RussellH says:

        Contingency and backups cost money. Keeping your fingers crossed is free. Does not always work though.
        🙂

      • pr99 says:

        It probably reduced the seat kilometres as well.

    • Rob says:

      Go to Waterside, then you see where the money goes. Probably the most luxurious company HQ in the UK.

    • JAXBA says:

      That’s definitely the way IAG/BA are looking at it; if they hadn’t focused on costs, the CASK increase would have been much worse. Unfortunately, I expect Cruz’s response is going to be to double down on the cuts, just like WW before him, just like Ayling did in the late 90s…

      Rob, clarification on last paragraph; Plan4 isn’t just for “the various customer-facing changes” but it’s the catch-all phrase for all the restructuring/cost focusing/investment going on. Plan4 has sub parts, like Plan4Investment, or Plan4Future, or Plan4BuzzwordHere… it IS a cost reduction activity, but part of the way BA has long spun the raison de être for cost cutting is so they can invest in the future. They did it before the A380 order, before T5 (Fit for 5), under Eddington (Future Size & Shape)… It’s in the DNA: jam tomorrow…

      • shd says:

        Thanks for the info, JAXBA!

        Unfortunately it seems there are far too many punters (generally, not just BA’s!) who swallow “jam tomorrow” promises without engaging their brains at all. Many of the usual suspects outed themselves on the #BAInvestment4U thread on FT.

  • David says:

    “Flybe – which uses avios as its reward currency”

    How many Flybe flights would you actually need to take to earn a free one? Given the shocking earning rate, low probability of posting automatically (never?), and the amusingly small window within which to claim (between 30 and 40 days after the flight), has anyone ever earned enough from Flybe for a reward flight? They’re more like a redemption partner, and even then a poor one, due to the taxes.

    • callum says:

      At least it’s a step up from their old scheme – every single reward flight I could find cost more in “taxes and charges” than just buying a cash ticket did!

    • shd says:

      It’s not as though the BAEC earn rate is anything to shout about.

      MAN-LHR in “CE” (!) earned me … wait for it … *875 Avios* recently.

      That’s what you’d get for converting £3.65 of Tesco Clubcard vouchers.

      Generous it isn’t!

      • Catalan says:

        No doubt you got your 40 tier points though. I’d shout about, for such a short flight 😉

      • John says:

        Well, how much was the flight?

        If value of Avios is 1p, MAN-LHR in CE is worth 9000 + 875 avios = £98.75 + £25 RFS fee = £123.75 (ignoring credit card Avios).

        £8.75 in avios is a 7% rebate of that.

        If Clubcard points are worth 1p, £3.65 is a 3% rebate.

        • Brian says:

          You can’t value Clubcard points and Avios both at 1p, given that 1 Clubcard point will get you 2.4 Avios!

        • shd says:

          I have no idea what you’re trying to show with those calculations!

  • Gill says:

    OT – 1st time S.Korea trip planning. Any recommendations for Seoul hotels? I have the amex travel offer for 50 off 200 to be used by the end of the month. Got the platinum benefits if that sways things one way or another. Thanks

    • johnny_c-l says:

      I stayed at IC Grand Parnas the other week, it was a nice hotel and got a good Amb upgrade. Location felt a bit out of it but public transport is so good it wasn’t an issue, and I didn’t feel Seoul had a ‘central’ location anyway. The Aloft hotel near Myeongdong looked interesting and good for the market/shopping and access to N Seoul Tower, worth checking out if that’s your thing.

    • Jon says:

      I stayed in Plaza Hotel (as wanted a Marriott). Nice hotel, and good location..

    • Pangolin says:

      Platinum benefits on Amex won’t make any difference to your treatment at the hotel unless you’re making an FHR booking.

      If you had Marriott status then using them for an Amex Travel booking would make a lot of sense as they give full status recognition for third party bookings. Personally, I could recommend the Courtyard Nandaemun. Great staff and location and they even have an executive lounge (Golds and Platinums in Marriott Rewards will get access).

      But generally you needn’t limit yourself to a chain hotel. For your first trip to Seoul you’re better off staying on the North side of the Han river – that’s where most of the hotels are anyway. The closer to Myeongdong the better.

    • Gill says:

      Thanks folks – plenty for me to look into there.

  • Peter says:

    Presumably the weaker pound versus the Euro has contributed to the higher costs at BA?

    • shd says:

      Plenty of BA customers paying in currency other than GBP

      • callum says:

        And plenty who aren’t (the majority I would imagine?).

      • Genghis says:

        Customers paying in currencies other than GBP affect top line revenue. Thought we’re talking about costs here?

        • John says:

          Aren’t fuel costs are in USD? GBP costs are mainly maintenance and salaries, I would think that EUR costs are mainly eurozone and related currencies (e.g. Denmark) airport fees.

        • HeathrowFlyer says:

          Is the CASK at constant currency?

          If so the FX variance will have no impact.

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