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Struggling Flybe confirms it is up for sale

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Shares in struggling airline Flybe have surged after it put itself up for sale amid turbulence caused by currency volatility and higher fuel costs.

Flybe’s stock soared by as much as 39% in early trading after it said it was “in discussions with a number of strategic operators about a potential sale of the company”, confirming a move first reported by Sky News.

However, shares later closed down by 3.4%..

The airline said it was part of a comprehensive review of its options “to address the current challenges facing the airline industry”.

It added that Brexit remained a major uncertainty for the sector and the wider economy and that a no-deal scenario would “put at risk, or damage, parts of the business”.

The carrier did not disclose the names of any potential buyer, though one is likely to be Stobart Group, the owner of Southend Airport, which abandoned a previous bid earlier this year.

Flybe also said it was also looking at “further capacity and cost saving measures”.

The announcement came as the carrier reported a fall of more than half in pre-tax profits to £7.4m for the six months to the end of September, compared to £16.1m in the same period last year.

Last month Flybe warned that it expected to report a £12m loss for the full year following weaker consumer demand over recent weeks – together with the impact of oil prices and the weaker pound.

That warning sent shares in the company plunging by 40%. It has lost more than 60% of its value over the year to date, prior to the start of trading on Wednesday.

Flybe has been trying to turn around its fortunes by reducing capacity and focusing on its most popular routes, as well as cutting hundreds of jobs and closing unprofitable sites – amid an intensifying industry price war.

In its latest update it reported a 7.2% rise in the key measure of revenue per seat.

Chief executive Christine Ourmières-Widener said continued improvements were being seen into the current third quarter – with a higher portion of seats sold than last year – that showed “the popularity of Flybe for our customers”.

“However there has been a recent softening in growth in the short-haul market, as well as continued headwinds from higher fuel and currency costs,” she said.

“We are responding to this by reviewing every aspect of our business.”

Flybe, which retained a fleet numbering 78 aircraft at the end of September, carries thousands of passengers between regional British airports and European destinations.

Garry Graham, deputy general secretary of Prospect union. said the airline’s announcement meant more uncertainty for the staff it represents.

“We are offering our full support to those affected and hope that whatever happens Flybe can continue as a going concern with jobs protected,” he said.

“Urgent talks have already begun between Prospect and the company.”

(c) Sky News 2018: Struggling Flybe confirms it is up for sale