Virgin still doing its last-minute Flybe Christmas shopping

Virgin still doing its last-minute Flybe Christmas shopping 21 December 2018

With the festive break looming, will Virgin Atlantic Airways make that one last purchase before the big day – the acquisition of Flybe??

Virgin Atlantic Airways said earlier this week that it was still continuing to review a variety of options for fellow UK carrier Flybe, including a takeover bid. The ongoing talks in the run-up to the festive season comes just weeks after the British regional airline put up a for sale sign outside its Exeter headquarters. Flybe said recently that it was in negotiations with possible suitors, but added it was also looking at other options, such as further reductions in capacity and costs. The LCC’s hand had been slightly forced, given its recent profit warning and continued market pressures. It should be noted that Virgin Atlantic already has a trading and codeshare relationship with Flybe.

Using Network Grandstand business intelligence tool, Aviation Analytics has taken a look (see graph below) at the troubled LCCs top 20 bases, (by weekly departures), ranked by average fare for the 12 months to September 2018 and colour-coded by our estimate of profitability.

Flybe top 20 bases graph

Top of the (Christmas) tree in terms of base profitability are the UK airports of Newcastle (#1) and Aberdeen (#3), as well as its overseas operations at Paris CDG (#3) and Amsterdam (#4). Indicating a heavy loss, and echoing Flybe’s decision to suspend several routes (Glasgow, Vienna and Milan Malpensa in October; Manchester, Budapest and Prague in January) from the airport, London Southend is unfortunately the Grinch of the LCC’s top 20 bases.

The overall picture is mixed, but overall the airline’s losses of c£1 per seat (approx. 1.7% of turnover) are not completely beyond repair and not worthy, in our opinion, of the substantial collapse in its share price since its announcement.

Flybe’s fleet (according to totals 80 aircraft, including 54 Q400s, 11 E175s, eight E195s, six ATR-72s and a sole Jetstream 41 (operated by Eastern Airways). Looking at the airline’s capacity data for this week (commencing 21 December) its top three biggest bases in terms of seats are Manchester (21,120 seats), Birmingham (20,606 seats) and Belfast City (16,892 seats). Its top three biggest routes this week are: Birmingham-Amsterdam (3,494 seats), Birmingham-Belfast City (2,506 seats) and Manchester-Belfast City (2,340 seats).

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