Flybe swings to full-year loss

Regional airline Flybe said it swung to a loss in the year to the end of March, as capacity grew while growth in consumer demand slowed.

The company reported a pre-tax loss of £19.9m versus a profit of £2.7m the year before, despite revenue rising 13.4% to £707.4m. Flybe said it took a hit from a £4.8m writedown related to the upgrade of its IT systems.

Seat capacity increased 12.3% to 12.7m seats, while passenger numbers were up 7.6% to 8.8m.

"Despite the substantial progress in reducing the size of legacy fleet orders in 2015/16, Flybe has still seen significant capacity growth in a market where we witnessed slower growth in consumer demand. The company has deployed its additional capacity on new routes and increased frequencies on existing routes, solely where these deployments could deliver at least a contribution to direct costs.

"New routes and increased frequencies were targeted to cover marginal costs in the early years of operation, but do not contribute significantly to overall profitability. The capacity growth therefore had a negative effect on profitability."

Also on Thursday, the group said it has developed a sustainable business improvement plan consisting of six focus areas: the customer, network and fleet optimisation, operational excellence with reliability and on time performance, organisational excellence, technology and costs.

As far as the outlook is concerned, Flybe said it is well placed as it enters 2017.18 as it will be in control of its capacity going forward.

"The year to date performance has benefited from the timing of Easter which fell in April this year and March last year. In H1 capacity growth will slow and in H2 capacity is expected to reduce with the likely outcome being broadly flat capacity for the full year. This slowdown has already shown a benefit in Q1 2017/18 with load factor increasing over the prior year."

At 0934 BST, the shares were up 5% to 34.66p.