After a dozen years as CEO and a disastrous public offering, the time is indeed ripe for Flybe CEO Jim French to hand over power to another executive to see if he can be more successful at resurrecting the airline.
The straight-talking boss of Flybe, Jim French, is stepping down as chief executive of the regional airline after a 12-year stint in the cockpit that culminated in a calamitous stock market flotation.
Mr French, who is currently chairman and chief executive, chose the day before his 60th birthday on Thursday to announce he was handing over to a former easyJet executive, Saad Hammad, on August 1.
Mr Hammad, who was easyJet’s chief commercial officer from October 2005 to April 2009, has plenty of airline experience having also been a non-executive director at Air Berlin – though he is currently managing director of Gores Group, a private equity firm with $4bn (£2.6bn) under management.
Mr French, who will move upstairs to chairman, said his change of role had been in the planning for more than a year. He had raised the issue with 48.1pc shareholder Rosedale Aviation, the Jersey-based trust that holds the stake of the late Jack Walker — the former owner of Blackburn Rovers FC.
“I’m 60 now,” said Mr French. “I said to the Jersey trustees 18 months ago that I’ll have been chief executive for 12 years and we need a fresh pair of eyes, ears and legs.”
Having been brought to market at 295p a share in December 2010 by Bank of America Merrill Lynch, the shares have nosedived after a series of profits warnings, as the business reeled from the economic downturn and the impact of Air Passenger Duty, which is now 18pc of revenues.
They shares closed at 50.5p on Wednesday, valuing the Exeter-based Flybe at just £37.8m.
Mr French, who owns 5pc of the shares, said the airline had made it clear at the float that he would step down within three years and there had been no investor pressure for him to do so sooner.
“They were supportive but they did encourage us to look externally,” he said.
Mr Hammad joins on the back of last month’s announcement of £40.7m full-year losses, with the airline midway through a turnaround that has seen it cut 29 aircraft from a planned 100-strong fleet, axe about 500 jobs in a £50m cost-cutting drive and focus on generating cash.
Mr Hammad’s task is to grow the company again. “The business is once again ‘fit to compete’,” he said, adding: “I look forward to leading Flybe into a new and exciting era.”
Mr French, who will drop to two days a week, insisted he had no intention of interfering. “I am passing him the ball and it’s his job to score the tries,” he said. “I am not going back on the pitch.”
He said the pair had “gelled within 45 minutes. We get on well.”
Mr French, who earned £600,000 last year, described Mr Hammad as “top-flight” and hinted he may get paid more, with much of his remuneration linked to boosting the share price. “He’ll get paid commensurate with the job,” Mr French said. “To bring someone to the West Country, you have to face the facts. If he delivers he’ll earn a few bob.”
Gerald Khoo, an analyst at Espirito Santo, said: “Hammad’s previous experience of turnaround situations and his track record at easyJet should prove especially useful in his new role”.
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Photo credit: A Flybe plane takes off from Cardiff International Airport, Wales. CloudSurfer UK / Flickr.com