Flybe - Financial and Network Optimisation Review
The recently appointed CEO of Flybe approached Nyras during preparations for the first board meeting. Recent quarterly results had shown a deteriorating bottom line, so the new CEO sought help from Nyras to gain a clear view of the underlying drivers of current financial performance and the relative financial risks and opportunities faced.
The key aims of the project were to:
- Complete a balance sheet review.
- Assist the management with a network optimisation review.
- Support the team in preparing a long-term business plan for the board.
Nyras began by completing a financial review of the business, providing independent insight to the key balance sheet risks and opportunities for management consideration. Our major focus was on areas of material financial risk, such as foreign exchange and fuel hedging positions, aircraft asset valuations and related loan financing and maintenance reserve liabilities. The primary objectives for the network review were to enable the management to develop the following:
- Scenarios for the optimum size and structure of the network.
- A deliverable transition plan for the most profitable mature state scenario.
- A budget network and revenue plan for the coming financial year.
Nyras worked collaboratively with the Flybe management to produce detailed business segmentation analysis of the financial performance of the airline. An analytical interrogation tool delivered the means for management to view network financial performance at both marginal contribution and route profitability levels through multiple lenses that included flight, rotation, aircraft type, line of flying, route, day of the week and on a seasonal basis. We also delivered a commercial tool to allow Flybe to assess passenger profiles on each route by point of sale, distribution channel, length of stay and type of business.
The support provided by Nyras accelerated the CEO’s understanding of the key factors impacting financial performance and enabled the commercial team to make informed and financially evaluated network decisions in timescales that would have otherwise been unachievable.
Our profit-oriented focus enabled managers to clearly identify short-term network changes alongside longer-term network optimisation to deliver significant profit improvements. Overall, it was estimated that changes could help to realise a 30–35% reduction in the fleet size in the long term.
During a follow-on project, Nyras assisted Flybe with the development of a Sustainable Business Improvement Plan. The plan ensured cross-functional working and support designed to deliver against an integrated set of key performance indicators and financial targets.