Flyr is taking important steps to reduce cash burn to prepare the company for the challenging winter season ahead. Several popular European destinations will remain on offer, while domestic routes in Norway will be reduced to a minimum. The Company will gradually increase its route offering during the spring and summer of 2023.
"We are entering a demanding winter season where discretionary consumer spending is expected to decrease significantly following the recent interest rate hikes, high general cost inflation and record high energy prices. This is hard-hitting to the airline industry and Flyr as a Company, and will result in reduced demand for air travel. This, together with the lasting high jet-fuel prices, leaves us with no other option than to adjust our route offering for the coming winter season. Unfortunately, this also forces us to furlough several of our dear colleagues. However, our goal is to put in place voluntary arrangements to retain as many as possible. By implementing these measures, we will be well positioned to ramp-up with full force for the coming spring and summer," said CEO Tonje Wikstrøm Frislid of Flyr.
The Company is targeting a temporary cost reduction of up to 50 percent this winter, with an estimated reduction in cash burn through the winter of approximately NOK 400 million.
From November to March, Flyr will operate routes to several popular European destinations, including Alicante, Malaga, Las Palmas, Barcelona, Roma, Paris, Nice, Berlin and Brussel. The Company will also offer flights from Oslo to Bergen and Trondheim, as well as "Christmas Routes" between several cities in Norway in December.
"We have experienced satisfactory demand on our routes to European holiday destinations and will maintain a selection of popular destinations for the coming winter. At the same time, we must admit that it has taken longer than expected to build loyalty among business travellers on domestic routes in Norway, where the incumbent carriers maintain large market shares. Development of solutions for distribution through travel agencies, where the majority of business travellers book their flights, has also taken too long. Moreover, it has not been to our advantage that the government in Norway has contributed billions of NOK in covid-19 related financial aid to our main competitors," said Wikstrøm Frislid.
Guests who have purchased tickets on cancelled flights will be contacted directly. All routes currently on sale from April 2023 and onwards will be operated as planned.
"We fully understand the frustration that our guests may be experiencing as a result of potentially changing travel plans. All affected guests will be contacted directly to be re-booked to another flight, or to be refunded," said Wikstrøm Frislid.
In order to reduce cash burn, Flyr will put non-profitable routes on hold, and maintain sufficient personnel to operate 5-6 aircraft during the winter. Our decision to make use of furloughs is based on thorough assessments and in dialogue with union representatives. We will arrange town hall meetings, department meetings and follow-ups with all employees over the coming days. Employees may be furloughed full-time or part-time in several stages, depending on how the situation develops. The Company aims to put in place voluntary arrangements to reduce the extent of furloughs.
Back in full force for summer season 2023
In the coming months, Flyr will continuously evaluate the demand for air travel. In a situation where demand picks up faster than anticipated, Flyr will be able to ramp-up and increase its route offering. This entails that employees may be brought back to work on short notice.
"Feedback provided by our guests thus far has been overwhelmingly positive, proving that we represent something new to the industry. We have achieved this by utilizing technology that simplifies booking through mobile platforms; by offering direct and permanent employment in the actual airline in Norway; by being available to our guests when they need assistance; and by prioritizing our guests, for example by offering complimentary water, coffee, and tea on all flights. We look forward to welcoming our guests on board this winter, as well as the coming spring and summer," said Wikstrøm Frislid.
Flyr has engaged the financial advisors Arctic Securities AS, Carnegie AS and Sparebank 1 Markets to conduct meetings with both existing and potential new investors. The purpose of these meetings is to discuss potential financial instruments to strengthen the Company's financial position. With more than 300,000 members in Flyr's loyalty programme, Flyr+, and 1.6 million guests on board since launch, there are still significant interest in Flyr's concept and attention to what Flyr has delivered up to now. The actual conversations are performed on the basis of the revised business plan.