Questions and Answers
Why are Flybe acquiring BA Connect?
We are purchasing BA Connect for five key reasons.
- Because it allows us to bring forward our growth targets by 2 years, through this acquisition.
- Because we are buying a business with warm routes we can achieve that growth without all of the risk and incidental losses associated with starting up new routes. This also finds homes for all our current aircraft orders, de-risking those assets.
- We are buying BA Connect because it will provide a source of key operational resource (pilots, cabin crew, and engineers) who will enable the business to achieve its growth plans.
- As the new business will have turnover of over £600m and fly 9.2m pax it will create a more defendable business.
- Finally we are acquiring BA Connect because we are the best company to fix the three things which need to change at the company. Those being; transition of BA Connect to our business models (aggressive brand and ancillary revenues); transition of the fleet to our two model fleet (Embraer Jets and Q400’s); thirdly to drive productivity throughout the organisation.
When is the sale effective?
BA Connect and Flybe have reached agreement in principle over the terms of the sale subject to due diligence and other conditions. It is hoped that the transaction can be completed by the end of 2006, with the new entity commencing operation on January 1st 2007.
Will the Head Office be moved?
No the HQ for the Group, the Airline, Aviation Services and Iscavia will remain at Exeter, providing an arrangement on future cost base can be reached with the new owners of Exeter Airport.
Will this move affect when we float?
Yes. As a result of today’s announcement, the Board have today announced that:
“Whilst the company is advanced in its planning of an IPO in May/June 2007, the board of Flybe has taken the decision that in the event of the successful acquisition of BA Connect, any change to the current ownership structure should be delayed to allow for the management team to fully focus on the integration of the new business.”
Will we have to cut any Flybe services?
A comprehensive review of the proposed new network has been prepared over the last few months. There are no significant changes planned to current Flybe routes and bases.
What aircraft do BA Connect operate?
EMB 145, Bombardier Q300, 146-100 series, 146-200 series, 146-300 series
Where do BA Connect fly to?
The BA Connect network includes a number of domestic and European services focusing on key European capital cities.
Are we taking on BA Connect lounges?
We will be establishing Flybe branded lounges at all our major locations. To this end it is our intention to acquire the BA lounge at Birmingham.
When will BA Connect be re-branded as Flybe?
Providing the acquisition is successful there will be a transition period between expected contract completion on Dec 31st 2006 and the new summer programme going operational on March 27th 2007. In this three month transitional period all aircraft, uniforms and branding will be altered to Flybe.
Will the sale include all of BA Connect aircraft, routes and staff
No. We are not acquiring the London City routes and the associated RJ100 aircraft and staff – these will remain with BA. We are also not acquiring the MAN-JFK aircraft and associated staff.
Will BA Connect trade under Flybe?
Over the envisaged three month transition period, the business will trade as BA Connect but will become branded Flybe from end March 2007.
How many employees will Flybe have post acquisition?
Flybe currently employ 1800, individuals and post acquisition this number will increase by 1900 to 3700.
Will BA Connect aircraft continue to operate on the current rotations or be spread across the Flybe network?
During the transition phase, they will operate largely as currently deployed, but then the aircraft will be deployed to a new commercial plan. The plan however has been developed to cause as little disruption to current basing as possible.
Will new bases open up?
The new commercial plan envisages some additional bases. These plans will be finalised over the next few months and are planned to be announced before January 1st 2007.
What happens to customers with current ticket reservations?
Bookings remain valid, subject to normal terms and conditions.
Will customers be able to use BA.com to make bookings/reservations?
Yes during the transition period, whilst the ‘BA’ flight code remains on services customers will be able to make and change bookings and use the services of ba.com
When can customers start booking on the Flybe website?
It is envisaged this will be possible as soon as the transaction is complete. This will hopefully be no later than January 1st 2007.
How will BA Connect pax with BA Miles be handled?
During the transition period BA members will be able to redeem their miles on BA services as normal
How many aircraft will we have in the fleet?
We will have 82 aircraft when and if the transaction is closed.
How many passengers will we be carrying?
The combined business will carry between 9 and 9.5m pax in year one. This will grow to over 10m pax in year 2.
How well is Flybe doing this year?
The acquisition comes as Flybe announces its strongest ever summer trading period, resulting in an operating profit of £20.5m for the six months to 30th September 2006, which compares to an operating profit of £12.4m in the same period on 2005.
This summer’s result follows a solid performance in the financial year 2005/2006 when the business delivered operating profits, before exceptionals, of £4.8 million whilst pursuing a focused strategy of major route expansion to position the business for long term profit growth. The decision was also taken to write down the asset value of its BAE 146 Aircraft which will be retired over the next 12 months by taking a £6.4m exceptional charge.
Will we change the pricing on the BA Connect routes?
From summer 2007 schedule the routes will be priced in line with the value model currently used by Flybe.
