Flybe on track to break even

Flybe on track to break even

Flybe is on course to break even in its last financial year.

The regional carrier saw a return to growth in both seat capacity and revenue in the final quarter of the year to March, it said in a trading statement this morning.

This follows the completion of the first year of a three-year financial turnaround plan.

Flybe said it was “positioned well to continue its positive momentum” ahead of announcing annual results on June 10.

The airline added 15% more capacity in the fourth quarter of 2014/15, but held its load factors constant and delivered 15% passenger growth.

Overall passenger revenues increased by more than 5%.

Results for the full year to March 31, 2015 are “anticipated to be in line with market expectations,” with Flybe on track to achieve around break-even at pre-tax profit level, the airline said.

This result would be before the £26 million cost of Embraer E195 jets and any impact of dollar loan revaluation, but after a £10 write down of a former loss-making joint venture in Finland and a European flight delay compensation provision of £6 million.

This would represent an improvement of £14 million on the previous year’s loss of £9 million on a comparable basis.

“This clearly demonstrates the improvement in our core business,” Flybe said. “Summer trading is also on track with the additional capacity selling through as planned.”
Summer passenger revenue is up by 9% year-on-year based on a 13% rise in capacity with 31% of the total sold, two percentage points behind last year due to the Easter holidays falling at a different time.

Flybe reported its revised routes from London City airport as “showing promising progress” with load factors on the biggest reaching 70% only five months after launch.

The carrier is to use two of a surplus fleet of E195 jets to start services from Cardiff airport, meaning that “solutions” have been found for half the fleet of 14 aircraft as it concentrates on operating a mainly turboprop fleet.

Flybe revealed that it was in “active discussions” to find a permanent solution for the remaining seven jets.

The airline exited, without any penalties, a $1 billion obligation to buy 24 additional E175s from Embraer in the past financial year with a simultaneous agreement to secure young, “attractively priced” turbo-prop Q400s.

The airline secured £150 million in funds to boost its balance sheet in February 2014.

Chief executive Saad Hammad said: “We’re pleased to report a return to growth at Flybe, one year after our capital raise.

“These results demonstrate that we are beginning to deliver on the company’s growth opportunities and that we’ve tackled the majority of the company’s legacy issues.”

He added: “There is clearly more to do; further improvements in efficiency, further cost reductions and the resolution of our remaining surplus aircraft.

“However, one year into our turnaround, we have a clear line of sight towards profitable growth.”


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