THE CONVERSATION
Chief Executive, Flybe
CHRISTINE ourmiÈres-widener The regional airline’s CEO talks to Andy Hoskins about its turbulent times, and now, its fresh future under a Virgin Atlantic-backed consortium
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arlier this year Flybe was within a day of going out of business, a scenario its Chief Executive Officer Christine Ourmières-Widener not surprisingly describes as the toughest experience of her career to date. “It was so close,” she says, “but the outcome is phenomenal. It was a complicated process but we are very proud because we saved the company and the jobs of 1,500 employees.” Connect Airways, a consortium comprising Virgin Atlantic, Stobart Group and Cyrus Capital, was Flybe’s knight in shining armour, purchasing the airline at a price its shareholders were in no position to reject. “It was a low share offer but we had to sell for 1p [per share] or the company would have disappeared,” says Ourmières-Widener. She joined the airline in January 2017 and although aware of the challenge that she faced, she could not have foreseen the extent to which it would worsen. “When I joined it was obvious we had service issues and we launched a strategy to shrink the fleet to improve the revenue and optimise our cost structure,” she explains. “We worked a lot on improving revenue per seat – and the results have been quite impressive – and on our load factors too. When I joined these were in the high 60s and now we are more mid-80s.” The airline was also dealing with “legacy issues” including cumbersome historic contracts. The situation worsened as shorthaul markets softened, fuel costs rose and foreign exchange rates started to bite. A profit warning was issued in November last year and credit card companies subsequently became more cautious, withholding users’ payments to the airline. 20
“We started to see restricted cash,” says Ourmières-Widener. “We were sitting on more than £50million of cash but we couldn’t use more than £10million of that.” The message now, however, is very much “business as usual” for Flybe while work goes on behind the scenes to plot a path forward. The airline is expected to be rebranded under the Virgin name but will function with a separate management team and fly under its own Air Operator Certificate.
We need people to feel empowered to take the next steps. It has been a tough time and very emotional for some people” The airline is currently subject to EU derogation conditions following the takeover, meaning it is relatively restricted in what changes it can practically implement. “We are expecting clearance in June or July and that’s when you can expect some announcements,” says Ourmières-Widener. “We just had a kick-off last week with our main stakeholders where the message was 'the future starts with us' because we need people to make sure they feel empowered to take the next steps. It has been tough and very emotional for some people.” The Flybe CEO says there are “no plans” to make redundancies, but its fleet and network streamlining will continue. “We need to decrease the fleet. We have already said we want to work with our new shareholders to decide the next steps but first we must shrink
whilst keeping the backbone of our fleet.” For now, its summer operation includes routes into Heathrow from Guernsey, the Isle of Man and Newquay, as well as flights from Edinburgh and Aberdeen. And it is Flybe's “backbone” of 78-seat Bombardier Q400 turboprops that make such routes feasible where others before them have failed – including Virgin’s Little Red operation. “There's a massive difference between what Virgin [Little Red] did at Heathrow and what we're doing,” says OurmièresWidener. “We are the only operator of turboprops into Heathrow.” It is clear that Flybe’s feeder traffic from the regions into Virgin’s long-haul hubs at Heathrow and Manchester has helped secure its future under Connect Airways. Flybe currently operates from Heathrow Terminal 2 and Virgin from Terminal 3, “but we will see what is possible”, says Ourmières-Widener regarding co-location. “We want to give to our common customers a fantastic experience and I agree the experience on the ground is critical.” Flybe is shaping up for its next phase but other airlines have not been so fortunate, including Flybmi and Wow Air which both ceased operations this spring. “It is absolutely a trend,” says OurmièresWidener. “We have been through it so we can see the pressures and the challenges, and I strongly believe we will see more consolidation in Europe. In the UK, uncertainty around Brexit really has not helped.” • On the day this issue of The Business Travel Magazine went to press Flybe announced it will cease all jet operations this October. Its Q400 turboprop aircraft will continue to operate across the network.
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4/3/19 05:12 PM