If Flybe can do it, why won’t we?
Thursday 24th January 2013, 2:30PM GMT.
FLYBE’S announcement yesterday that it is cutting costs and shedding jobs to return to profitability is a major blow to its employees and it is the first time in a generation that it has had to take such drastic action.
The decision, however, is to ensure that the company has a long term future in the current economic conditions and to demonstrate to its shareholders that it is competent and capable of delivering value for the money invested in it.
The parallels with the States of Guernsey could not be more striking.
Although Flybe’s turnover is around two-thirds of the States’ and its workforce is about 1,700 fewer, it intends to save about £35m. of recurrent annual expenditure – nearly the same as Guernsey’s black hole deficit – by 2014/15 and will do so by losing 20% of its managers and a further 10% of overhead and production headcount.
Because redundancies will be required, that will cost an estimated £10-12m. with the majority of that falling into the 2012/13 accounts.
In other words, it will take a hit now so that it can move forward in the future with a new strategy and a leaner, more focussed business.
So in little more than two years, it will have seen the crisis developing, taken swift steps to stem the losses and move on much fitter for the future.
By contrast, Guernsey’s government, reacting to the same crisis, called in consultants in 2009, has bickered about paying them for advice not followed, made no one redundant, restructured nothing – other than chuck out the highly regarded head of the Guernsey Border Agency – is still operating at a loss and is now arguing about whether it needs a financial transformation programmed at all.
Part of Flybe’s plan is to outsource some of its existing operations and concentrate on those that show growth potential while here we spend millions maintaining an entire hospital for just 17 patients and subsidise sunset industries like dairy farming and horticulture but hold back finance by failing to invest in its expansion.
Flybe knows that it cannot fool its shareholders, which is why it has acted.
Government here relies on taxpayers’ apathy to allow it to do nothing other than waste their cash.
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