Flybe returns to FY profit, issues cautious outlook

Shares in Flybe fell almost 5% as the regional airline returned to full-year profit on improved revenue, despite the impact on bookings due to terror attacks in France and Belgium, but issued a cautious outlook.

Pre-tax profit was £2.7m, from a re-stated loss of £23.6m a year earlier. Revenue was ahead at £623.8m, from a re-stated £574.1m.

"This performance was delivered despite the adverse bookings impact experienced from the tragic events in Paris in November and in Brussels in March," said Flybe.

The return to profit followed the absorption of about £20m of costs relating to the E195 jets, and pressure on yields from industry-wide capacity growth acceleration and lower fuel costs.

Flybe was now in its final year of turnaround and focused on delivering profitable growth, it said.

Even still, the market scrutinised forward-looking comments in which Flybe noted the challenging industry environment, citing several reasons.

"These include the threat of terrorist activity, industrial unrest in France which accounts for about 12% of Flybe's seat capacity, consumer uncertainty fuelled in part by macro-economic volatility and in part by anxiety ahead of the EU referendum, and the highest level of seat capacity growth in the European short-haul market for six years," the company said.

"In light of this, Flybe will remain disciplined in pricing, continue to focus on unit cost reduction, and maintain its capacity discipline through continuing fleet transactions."

At 5 June, Flybe said it capacity was up 17% on the year, but noted 43% of capacity sold, versus 46% a year ago. It further said yields were down 5% and that there had been a 12% slide in passenger revenue per seat. The number of seats sold was up 8%.