Christine Ourmieres-Widener’s tumultuous two year reign at Flybe is over. The airline announced her resignation, effective 15th July 2019, on Tuesday this week. It follows the firesale of the airline to Connect Airways earlier this year.
Some surprise has been expressed that her resignation took so long, given that Flybe has effectively ceased to exist. New owners, a consortium led by Virgin Atlantic, are already looking for a new strategy for the airline which will soon be absorbed into the Virgin Atlantic brand.
It’s a sad end for a once proud 40 year old airline that was the largest regional airline in Europe, flying 210 routes to 15 countries. When Flybe was floated on the LSX in late 2010, its shares were trading at 295p each, valuing the airline at £215 million. When Flybe was sold to Connect Airways in February, the shares were sold for 1p each. Connect Airways paid £2.8 million for Flybe’s operating assets and £2.2 million for the parent company.
The sale price has been called “disappointingly low”, and Christine Ourmieres-Widener was criticised for not pursuing better value for long suffering shareholders. Many saw 75% wiped off the value of Flybe shares in just two months last year, and continued to lose value into early 2019.
In defence of Christine Ourmieres-Widener
It could be argued that Christine Ourmieres-Widener took up a poisoned chalice when she started her tenure as CEO in January 2017. Although Flybe had performed solidly throughout much of its history, problems came to the fore after the business was floated in 2010. Suddenly the airline had to meet the expectations of shareholders in a rapidly evolving European aviation environment.
Flybe had historically operated turbo prop aircraft, most recently Bombardier Q400s. Prior to Christine Ourmieres-Widener’s tenure, Flybe entered into an expensive deal to buy 35 Embraer jets at a cost of £850 million. Ourmieres-Widener has criticised this purchase as the “wrong fit” for Flybe, and under her tenure the majority of the jets were returned. However, the strategy has represented a significant drag on Flybe’s capital since their acquisition.
Internal and external issues
As well as this, there were a series of internal issues, such as a failed upgrade of its complex aviation IT and a some ill advised joint ventures and franchises, all of which served to further beat down Flybe. The most notable of these was a 2008 franchise agreement with Loganair. With this, the two airlines shared Flybe’s colours and competed on several of the same routes. As a result, both lost significant amounts until the deal was wound up in 2017.
In 2011, Flybe brought Finncomm Airlines in a joint venture with Finnair, calling the airline Flybe Nordic. In 2014, Flybe sold its stake to Finnair for £1. The reason given was weak revenue from a declining Finnish domestic market.
Issues beyond Flybe’s scope included continued Brexit uncertainty and fierce competition from other low cost carriers such as easyJet and Ryanair. Both these LCC giants have a history of moving jets onto Flybe’s most lucrative regional routes.
Flybe’s continued brushes with insolvency have caused credit card companies to withhold payments for passenger tickets until after the flight. This was in case the airline “failed to meet charges for services”. Ourmieres-Widener said this was contributing to Flybe’s “very bleak” working capital situation.
Through the first few months of 2019, operating issues continued for Flybe. The airline faced crewing problems across its 14 UK crew bases. In April, a strike in Amsterdam forced Flybe to cancel dozens of flights. This forced the airline to accommodate and compensate affected passengers. Flybe also revealed it was closing some bases and downsizing others in an effort to reduce costs.
It was estimated Flybe was losing £7,000 an hour by the time it was bought by Connect Airways.
Ourmieres-Widener hopes for a seamless transfer
Not all of these events happened on Christine Ourmieres-Widener’s watch. She was brought in to turn Flybe around, and has had to lead the airline amidst rumours of the airline’s sale or demise throughout much of her tenure. The imminent threat of bankruptcy early in 2019 undoubtedly influenced her decision to accept the lowball offer from Connect Airways.
A replacement CEO for Christine Ourmieres-Widener is yet to be announced but, in a statement, Ourmieres-Widener said she hopes for a seamless transfer.
Have some thoughts on Flybe and Christine Ourmieres-Widener ? Post a comment.