UK regional airline Flybe has raised almost $260 million in fresh capital through a share flotation launched Thursday in London. The company, which has been battling to rebuild its business model with an aggressive program of cost cutting, is issuing a total of up to 141.5 million new shares to raise £155.6 million. The offer price on February 20 was UK110p per share, representing a 7.2-percent discount on the stock’s UK118.5p mid-market price on February 19.
The share offer comes three months after Flybe’s new management team announced plans to cut up to 500 jobs, including 179 pilots, and the closure of its bases in Aberdeen, Newcastle, Guernsey, Jersey, Inverness and the Isle of Man. It subsequently reduced the number of job cuts to 450. In November last year the airline’s long-standing lead shareholder, Rosedale Aviation Holdings, sold its entire 48.1-percent stake. Over the past two years, Flybe has cut almost 1,100 jobs.
On February 3, the company said that during the third quarter of the current financial year it increased passenger figures by 9 percent, to 1.9 million, and achieved a 71-percent average load factor. Costs per seat fell by 5.2 percent, to £48.58 ($75.66), while revenues per seat increased by 2.3 percent. The carrier has said it wants to achieve total savings of £7 million ($11.6 million) in the 2013-14 financial year, and £26 million ($43.2 million) next year.
In addition to its UK operations, Flybe also operates services in Finland under a joint venture launched with Finnair in October 2011 called Flybe Nordic. Its 70-aircraft fleet consists of 45 Bombardier Q400s, 14 Embraer E195s and 11 E175s. The carrier has 24 more aircraft on order and options for 80 more, but in May last year it announced plans to slow the delivery rates to protect cash flow.
“We have made significant progress over the past year in stabilizing, restructuring and reconfiguring the group,” said CEO Saad Hammad, the former EasyJet executive who took over from long-standing leader Jim French last year. He indicated that the airline would use approximately $112 million of the new capital to strengthen Flybe’s balance sheet, while the remainder funds service expansion and improvements in productivity.
Separately, Air France-KLM has announced plans to buy a 1.5-percent stake in Brazilian carrier Gol Linhas Aereas Inteligentes for approximately $100 million. The move comes less than two months after the European group declined to increase its holding, which now stands at 7 percent, in struggling Alitalia. Abu Dhabi’s Etihad Airways is now considering a move to invest in Alitalia.