20th Feb 2014 09:51
LONDON (Alliance News) - Airline Flybe Group PLC Thursday said it is seeking to raise net proceeds of about GBP150 million by offering up to 141.5 million shares at 110 pence each through a placing and open offer, money it will use to strengthen its balance sheet and reduce its aircraft costs.
In a statement, the company said it intends to raise GBP100.5 million gross by issuing 91.4 million shares through a firm placing, and about GBP55.1 million gross by issuing 50.1 million shares through a placing and open offer.
It will use the money to strengthen its balance sheet, particularly providing additional cash reserves that will protect it against unforeseen disruptions or occurrences. It will also invest in IT and its finance functions, which should boost productivity and cut costs, enhance its customer service operations, and expand its branded route and base network in the UK over the next one-to-two years as well as expanding its white label product.
It will also use the funds to reduce its fleet ownership costs, moving towards full ownership of its aircraft rather than using operating leases. It said it will deploying capital to own aircraft with secured loans.
"We have made significant progress over the past year in stabilising, restructuring and reconfiguring the group," Chief Executive Saad Hammad said in a statement. "Today I am pleased to announce a GBP150 million fully underwritten capital raise which will significantly strengthen our balance sheet and provide capital to pursue our profitable growth strategy."
Flybe is going through a major restructuring programme as it tries to improve profitability and make itself competitive in a very intense UK aviation market. Last November, Flybe reported that it swung to a profit in the first half of its current financial year thanks to a jump in revenues and as its cost cutting and restructuring programme started to pay off, but new CEO Hammad announced a further revamp of the airline, including cutting 500 jobs, in an effort to ensure the recovery is sustained.
Flybe shares were down 1.7% at 116.5 pence Thursday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Flybe Group