Improving UK business lifts airline Flybe
LOW cost airline Flybe has said it is well positioned for the future with a strong balance sheet and an improving core UK business.
The airline, the largest in terms of passenger movement at Birmingham and Manchester airports, said its lower cost base would help provide a firm foundation for future development.
In a trading update from October 1 to December 31, 2014, the airline said it expected to achieve around break-even at pre-tax profit level for the full year to March 2015. This is before the costs of the new E195 aircraft and any impact from US dollar loan revaluation, but after the already announced write down of its Finland JV of £9.9m and the EU261 flight delay provision of £6m.
Saad Hammad, Chief Executive Officer, Flybe said: “Flybe’s improvement in its core UK business continues to progress. Only a year into our three year transformation we now have a platform which enables us to compete in a tough environment where the consumer demands value. We have responded to that by keeping our fares low and launching new routes.
“Having removed nearly a $1bn of future liabilities over the course of this year in relation to the firm legacy order for additional Embraer E175 aircraft and ongoing losses of Flybe Finland, we are making solid progress towards finding a solution to our remaining legacy issue, Project Blackbird.
“We are now well positioned to continue our positive momentum towards delivering sustained profitability and value to shareholders.”
The airline’s core UK routes were said to be continuing to perform in line with expectations. It said marketing and brand awareness campaigns continued to resonate with customers across the UK regions and awareness of its “Faster than Road or Rail” product offer was gaining momentum.
“We intend to keep our fares low as we compete against airlines, road, rail and ferries,” it said.
The airline has launched 20 new routes for summer 2015, including nine from its new base in Bournemouth and three domestic routes from London Stansted. The launch of six new routes to and from London City in October 2014 is said to be encouraging and as with all new routes these will remain under constant commercial review until they reach maturity.
“We are continuing successfully to position the business for next year with an expanding route network for the summer,” it added.
Q3 financial highlights include 2.4% growth in passenger revenue per seat to £50.23 (Q3 2013/2014 £49.04); 5.5 percentage points improvement in load factor to 74.3% (Q3 2013/14: 68.7%), driven by a 5.2% reduction in passenger yield to £67.65 (Q3 2013/14: £71.33); and a 6.1% reduction in seat capacity to 2.5m seats (Q3 2013/14: 2.7m seats) in line with strategy.
Passenger revenue reduced by 3.8% to £126.8m (Q3 2013/2014: £131.8m).
It said fuel markets were experiencing significant reductions in fuel prices with the dollar strengthening against sterling. Given its hedging profile on both fuel and USD, it said this would have no beneficial effect on its FY15 and minimal impact on FY16 results.
