Acquisition of 24 Bombardier Q400 Dash 8 Aircraft from Republic Airlines to Flybe Fleet

From N380NG to G-PRPL

Purpose

To manage in-service of an additional 24 Bombardier Q400 Dash 8 aircraft.

Problem/Opportunity

Flybe has enhanced business model and has new and revised requirements for destinations. The destinations require additional aircraft suitable for servicing these destinations.

Project Goal

To bring 24 aircraft into service on Flybe’s fleet by the end of 2017.

Project Objectives

Acquire 24 Bombardier Q400 Dash 8 aircraft from Republic Airlines (USA) in two phases.

1. 5 aircraft from October 2014 to June 2015

2. 19 aircraft from October 2015 to December 2017

Project Open Status

The project already has initiation as at 6^thOctober 2014. The first aircraft is contractually due for deliveryon 26^thFebruary 2015.

However the Bombardier EASA modification kits has a 5 month lead time for delivery to Skyservice. This is due for order w/c 6^thOctober.

This redefines the first aircraft in-service to late March 2015.

Project Scope

Overview

To bring 24 aircraft into service on Flybe’s fleet by the end of 2017:

The first 5 aircraft to be brought into service second quarter 2015.

Aircraft 6 to 24 to be brought into service between October 2015 and December 2017.

Tasks to bring aircraft into service include:

Project Preparation:

1. Contract signed with Republic for Flybe to lease Q400s: 1^st Delivery schedule mid Feb, with 2 aircraft per month thereafter.

2. For each delivery, Republic will fund C Checks (Chicago) and modifications (Toronto).

3. Re-registration: Flybe can accept the aircraft at the C Check (using outsourced resource) in Chicago.

4. Aircraft Acceptance: Flybe notifies Embraer who then cancel our order and return our PDPs (for 24 aircraft).

5. Aircraft have seats in 3 classes, work required (likely Exeter) to finalise layout, branding etc.

6. Aircraft paint location to be confirmed (USA/UK)

7. Confirm approach to putting Q400s into service.

8. Committed to lease 2 spare engines. There is a further 4 engines which are leased to Republic.

9. DA to review leases and propose approach to sub leasing. IS initially interested in them.

10. Republic would like Flybe to put in “power by the hour” contracts with a security assignments. secure on a reasonable endeavours basis.No liability to any break costs of existing contracts (so we are not expecting any entry costs). Most engines are half-life.

11. Ian Smith: Currently looking to re-tender whole support model pre Xmas for Q400

12. Spares: Republic would like Flybe to purchase $24m of spares. David A progressing discussions.

13. Option to purchase aircraft.

14. Pilots – Flybe involvement starts in Toronto (test flight in Toronto and delivery flight (ferry) to UK)

15. There will be 4 remaining Embraer aircraft on order (due 2018) following this transaction.

Project Prerequisites:

1. EASA Modification PO to SkyService

2. Bombardier EASA Modifications PO to Bombardier/SkyService

3. Flybe agree terms for Bombardier EASA Mods for a/c 6-24

4. Negotiations with Pratt and Whitney for Engine PBH Agreement

5. Negotiations with Dowty for props PBH Agreement

6. Negotiations with Hamilton Sundstrand for APU PBH Agreement

7. Negotiations with Willis Lease re 4 x spare engines leases

8. Negotiations with Republic re $26m spare parts (tied with Smartparts)

9. Negotiations with Republic and Bombardier re possibility of using Smartparts

10. Flybe provide credit/corp DD data to EDC for their consent

11. Secure EDC consent to sub-leasing and aircraft mods

12. Set up outsourcing of Q400 inspectors (Indy records check 1month before C check)

13. Agree with Republic the exact spec of hardcopies needed for CAA at delivery

14. Recruit and train expanded pilot workforce (or retrain ejet pilots)

15. Circulate Lease Conditions Precedent

16. Issue Gant plan to Republic and invite comment/interface

17. Investigate 71-74 seat configuration change and timing

18. Provide all tasks and timing to Paul W for 6+6 and FY16 budget

19. Issue delivery note to Embraer at each Q400 delivery

20. Place Pos for all parts needed for Flybe mods post acceptance from Republic

21. Identify and plan 175 downtime for installation of Package 1 Fuel Modifications

22. Install Package 1 Fuel Modifications

23. BNDES CF waiver, establish internal plan and request from BNDES

24. Select registration sequence and then order from CAA

Regular Meetings:

1. Flybe Project Team Meeting – Every Monday 17:00 Hangar 1.3.1

2. Flybe Republic Skyservice – Every Wednesday 14:00 Hangar 2.2.2

3. Project Status: Every Wednesday 11:00 JWH

4. Flybe Task Force: Friday 11:00**

** first meeting scheduled 24/10/14. Attendees to be expanded.

Outcomes/Success Criteria

24 Q400 aircraft serving destinations

Assumptions and Constraints

Assumptions

Bombardier will honour delivery date of modification kits according to timeline. Initial kits ordered 10^thOctober 2014.

Constraints

Workspace and resource (being defined)

Risks

Assessment and Management

Risks will be assessed (mitigated/eliminated) in two ways (See 12.3 Documentation):

1. Lessons Learned Register

2. Predictions Register

Risks will be recorded in the Risks Register.

Risks will be managed in the Open Items Register and Risks Register.

Where risks are mitigated and/or eliminated these will be commuted to the Issues Register.

Risk Exception Reporting

Any incident predicted, anticipated or sudden will adhere to the following procedure for normal office hours:

1. Task Resource to escalate to Team Lead/Dept Head/Project Team

2. Team Lead to escalate to Dept Head/Project Team

3. Dept Head to escalate to Project Team/Directors

4. Project Team to escalate to Dept Head/Directors

Contact details will be issued to all parties during out-of-hours work.

Known Risks

Estimated Cost

£18 Million

Estimated Duration

October 2014 to December 2017

Governance and Management

Governance:

Project Management Office

Management:

Methodology:

Project Management Methodology: PRINCE II (Best Practices)

Project Management Team:

Project Sponsor

Project Manager

Subject Matter Expert/Consultant

Documentation: