Flybe Group PLC Inks Deal With London City Airport

Flybe Group PLC (LON: FLYB) continues its turnaround with new five-year contract.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 23 April, 2014 3:55 pm BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Shares in Flybe (LSE: FLYB) increased 4% after the low-cost airline revealed it has signed a five-year agreement to start operating international and domestic flights from London City Airport. This marks a return to London for Flybe after selling 25 takeoff and landing slots at London Gatwick a year ago.

Flybe expects to carry up to 500,000 passengers annually, and will offer flights four times daily to Edinburgh as well as less frequent flights to Belfast, Inverness and Exeter. Flybe claims that these routes will “boost connectivity” to London from elsewhere in the UK, while domestic services will be subsidised by flights to selected leisure destinations in France and Spain.

Flybe only returned to profit in the six months to September and turned to shareholders for £150m to help its recovery plan.

The chief executive, Saad Hammad, commented:

“Today’s announcement is a significant landmark in the re-birth of Flybe. We are delighted to re-enter the London market at London’s most convenient airport following a rigorous profitability analysis utilising our strict route assessment model.”

“We look forward to a long and successful partnership.”

Flybe will publish its 2014 results on 11 June and the share price has enjoyed exceptional gains in the last 12 months, increasing threefold. Of course, the decision to ‘buy’ — based on today’s announcement and the wider prospects for the air travel sector — remains your decision.