Flybee Financial Analysis

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EasyJet
Flybe
Ryanair

Financial Analysis

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ULMS701
2012Is the domestic air travel boom over?

Word Count : 1,996 (excluding Table of Contents, Captions, Footnotes, Appendixes and References)

Table of Contents

1.Introduction.................................................................................................................... 2

2.Market and Competitors ............................................................................................ 3

3.Financial Analysis ......................................................................................................... 4

4.Value Drivers’s Analysis........................................................................................... 11

5.Conclusions ................................................................................................................. 12

6.Appendixes................................................................................................................ 16

7.Table of Figures ........................................................................................................ 19

8.References.................................................................................................................. 20

Page 1

1. Introduction

December 10, 2010 was a crucial day in the history of Flybe1—a leading UK airline. Eight years after its establishment, the Exeter-based company announced its flotation at London Stock Exchange (LSE). The launch price of the company was 295p per share, with the global value of the business an estimated £215 million; just one day after flotation, shares rose in value by 16%, subsequently equating to 341.25p with revenue of £60 million for the airline operator. An enthusiastic Jim French2, Chairman of the company, stated that, ‘The listing has given the business the platform to expand in continental Europe. It is a massive market. We are taking Flybe into Europe as a regional airline’ (Milmo, 2010b). The highly positive start promised a great future for the company as a leader in the UK’s top airline operators. Finally, the great investment of Jack Walker and his family was accomplished.

However, after a few months, something went wrong: the shares’ value fell to 65p3 with a loss of

78% following flotation. Subsequently, Jim French stated, ‘I'm more frustrated than cross. I'm frustrated for my staff and management who are delivering a great business but see the shares given a kicking by people who don't appreciate the complexities of this business’ (Osborne, 2011). Despite good results of Flybe in a doldrums market, the investors did not reward the business of the company. With this in mind, in an attempt to gain understanding, this report will analyse the historical record of the company and its position in the market, and will further assess the value drivers and financial company performance with the use of key performance indicators (KPIs) and key ratios.

1 Flybe Group PLC (styled Flybe) (LSE: FLYB).
2 Jim French is the Chairman and Chief Executive Officer of Flybe since its creation (2002). Considered one of the best managers in the airline industry, he was elected twice as “Airline Executive of the Year” (2002 and 2004) (source Flybe Corporate Media : http://www.flybe.com/corporate/media/management_team.htm). 3 Share price on October 6, 2011 (Osborne, 2011).

Page 2

2. Market and Competitors

Flybe is a leading UK airline company and, with over 6.7 million passengers in 2010, is the fifth most popular airline company in the UK (the third excluding Thomson Airways and Thomas Cook Airlines—two specialised charter...
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