Flybe dismisses three directors amid operations overhaul

Flybe, Europe’s largest independent regional airline, has shown three directors the door and merged its divisions as part of the struggling group’s drive to cut costs and stem losses.

New chief executive Saad Hammad, who announced a full review of Exeter-based Flybe’s operations when he took over in August, has moved quickly to restructure the business ahead of his own three-month schedule.

The airline group’s divisional structure, comprising the passenger airline Flybe UK and its leasing operation Flybe Outsourcing Solutions, will be disbanded, with all the operating units integrated.

Three directors running the two divisions and corporate strategy – Andrew Strong, Mike Rutter and Mark Chown – have left Flybe. Paul Simmons will join the company from easyJet as chief commercial officer next month.

Hammad commented: “It has quickly become clear to me that Flybe’s prospects will be significantly enhanced by disbanding the existing divisional structure and integrating all operations into a single, simpler and lower cost operating unit. Today’s announcement facilitates that move and will form an important part of the strategic review of the business which I expect to conclude in November. I look forward to sharing its full conclusions.”

Since the appointment of Hammad, a former director of Air Berlin and easyJet, Flybe shares have crept back up to over 87p, almost double the summer low. The airline has struggled since the economic downturn hit regional businesses hard, while UK aviation taxes have compounded its woes. Pre-tax losses reached £40.7m last year. An existing turnaround plan already aimed to slash £50m a year in costs, including laying off around 500 staff.

Norwegian Air Plans Expansion In US Market

Budget airline Norwegian Air Shuttle plans to set up bases in New York and Fort Lauderdale next year and will significantly increase services between the Nordics and the US as it receives more Boeing 787 Dreamliners.

Norwegian, the first budget airline in recent years to offer transatlantic services, will fly to Los Angeles, San Francisco and Orlando in addition to its routes to Fort Lauderdale and New York, chief executive Bjoern Kjos told a news conference on Tuesday.

Norwegian placed Europe’s biggest aircraft order last year, 222 planes from Boeing and Airbus. It has been one of Europe’s most successful carriers, taking market share from SAS and also moving outside its traditional Nordic market with bases in London and Spain.

It is also one of the most successful stocks on the Oslo bourse with its shares up 105 percent over the past 12 months.

Still, many analysts consider the stock undervalued as it is trading at 7.8 times its expected 2014 earnings, well below an average of around 10 for European peers.

Norwegian launched long-haul services earlier this year when it received the first of eight 787s, and it has recorded a 96 percent load factor on those flights.

The firm says it can operate long-haul flights 30 percent cheaper than traditional airlines, primarily because of the 787′s lower operating cost.

Alitalia Hires Bankers To Tackle Cash Crisis

Struggling Italian airline Alitalia has hired boutique investment bank Leonardo to help tackle a liquidity crisis that may see it running out of cash before year’s end.

The move is aimed at finding ways to raise more than EUR€400 million (USD$527 million) to keep the loss-making carrier afloat, a source familiar with the situation said.

Alitalia has struggled to make a profit throughout its life and has been bailed out repeatedly by the Italian state.

It agreed salary cuts with unions in June and its chief executive and board members reduced their pay by 20 percent ahead of the drawing up of a new strategic plan.

The airline, which quadrupled its net loss to EUR€280 million in 2012 compared with the year before, said in July it needed EUR€300 million this year to keep running but expected to break even by 2015.

The airline, which is 25 percent owned by Air France-KLM, was rescued from bankruptcy in 2008 and bought by a consortium of Italian companies including bank Intesa Sanpaolo, road operator Atlantia and holding company IMMSI, the owner of scooter-maker Piaggio.

The investors might sell out after the expiry in mid-October of a lock-up period, paving the way for new shareholders.

Alitalia said in a statement it had hired the bankers to “assist the company in its relationships with the banks.”

Italian newspapers said last month Alitalia was in talks with Etihad Airways on a commercial deal that might lead to the Abu Dhabi carrier taking a stake.

Alitalia and Etihad were also mentioned in the context of a possible tie-up earlier this year, but Etihad said at the time there were no talks between the two firms beyond those on code sharing.

Etihad was not available for comment but a source at Etihad said that, with a stake in Air Berlin and a commercial partnership with Air France-KLM, Etihad was not keen on another investment in a European carrier.

Alitalia earlier this year hired turnaround specialist Gabriele del Torchio to lead it back to profit.

The airline has pushed back to the end of September the approval of its mid-year financial statement, that was due to be approved by the board, mainly to address a tax dispute.

(Reuters)