Flybe puts itself up for sale as H1 profits slump

Budget airline Flybe said on Wednesday that it's putting itself up for sale as it posted a slump in first-half profits.

The company, which warned on profits last month, said it is in discussions with a number of strategic operators about a potential sale. Flybe is also reviewing other options, including further capacity and cost saving measures, and initiatives to strengthen the balance sheet and preserve cash resources.

The announcement came alongside the airline's first-half results, which showed a 54% drop in pre-tax profit to £7.4m as revenue declined 2.4% to £409.2m, with the company hit by rising fuel prices and a weaker pound.

Adjusted pre-tax profit, meanwhile, was up 48.9% to £14m.

Chief executive officer Christine Ourmieres-Widener said: "Continued improvements are being seen into quarter three which demonstrates the popularity of Flybe for our customers. However there has been a recent softening in growth in the short-haul market, as well as continued headwinds from higher fuel and currency costs.

"We are responding to this by reviewing every aspect of our business, especially further capacity reduction, cash management and cost savings. This is already starting to have a positive impact, as shown by the improved first half adjusted profit before tax; however, we must do more in the coming months. We remain confident in the vital role that Flybe plays in UK connectivity."

Neil Wilson, chief market analyst at Markets.com, said Flybe has been a "zombie airline" for some time.

"There are more of them and we see this as simply the latest domino to fall in the European short haul airline sector. There will be more to come, although some temporary reprieve perhaps if oil continues to fall.

"Who might buy? The usual suspects of IAG and EasyJet are probably the best shouts. Exposure to UK market may be a tad risky for others right now, although it will be a bargain."

Stobart Group, which owns Southend airport, abandoned its chase for Flybe back in March after the two parties were unable to agree terms. The company had confirmed in February that the two were in talks about "a number of potential structures", including a takeover.

At 1235 GMT, the shares were up 4.7% to 12.25p.