Flybe chief fails to rule out further cutbacks

AIRLINE Flybe has failed to rule out further cutbacks as it looks to realign the business following a major review.

In a trading update, the airline said seen a return to seat capacity and revenues in the final quarter of the year, having completed the first year of its three-year-turnaround.

However, chief executive Saad Hammad hinted that there may be tough decisions in the short term before the full benefits of the turnaround are felt.

He 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.”

“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.”

Flybe, Europe’s largest regional airline and the largest in terms of passenger volume at both Birmingham and Manchester, said it had achieved 15% additional capacity in Q4 2014/15 and matched this in terms of passenger growth.

The required yield investment associated with the new capacity and lower spot fuel prices were more than offset by higher passenger volumes and overall passenger revenues increased by more than 5%.

It said results for the full year to March 31, 2015 were anticipated to be in line with market expectations, with Flybe on track to achieve around break-even at pre-tax profit level, before factoring in the £26m cost of new Embraer E195 jets and any impact of dollar loan revaluation, but after a £10m writedown following the withdrawal from its joint venture with Finnish airline Finnair and EU261 flight delay provision of £6m.

It said this outturn represented an improvement of £14m on the previous year’s loss of £9m on a comparable basis, excluding the one-off effects of the Finland JV divestment, the EU261 provision, dollar loan revaluations and last year’s restructuring costs, together with the proceeds from the sale of its Gatwick slots.

“This clearly demonstrates the improvement in our core business,” it said in the update.

Summer trading is said to be on track, with additional capacity selling through as planned.

So far there has been a 9% increase in passenger revenue against the same period last year, while capacity is up 13%.

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