Flybe returns to growth

Exeter-based Flybe has announced the following trading update ahead of the announcement on 10th June of its results for the year ended March 31 2015:

Flybe saw a return to growth in both seat capacity and revenue in the final quarter of the year, having completed the first year of its three year turnaround and is positioned well to continue its positive momentum.
The airline delivered 15% additional capacity in Q4 2014/15, but held its load factors constant and delivered 15% 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%.

Results for the full year to March 31st 2015 are anticipated to be in line with market expectations, with Flybe on track to achieve around break-even at pre-tax profit level, before the £26m cost of the E195 jets and any impact of USD loan revaluation, but after the Finland JV write down of £10m and EU261 flight delay provision of £6m.

This outturn would represent an improvement of £14m1 on the previous year’s loss2 of £9.0m on a comparable basis, excluding the one-off effects of the Finland JV divestment, the EU261 provision, USD loan revaluations and last year’s restructuring costs, together with the benefit from the sale of Gatwick slots. This clearly demonstrates the improvement in our core business.
Summer trading is also on track with the additional capacity selling through as planned. The Company’s cash position remains strong.

Current UK Trading (Q4 2014/15)
 More than 5% increase in passenger revenue versus prior year
 15% increase in capacity versus prior year
 15% increase in passenger volumes versus prior year
 70% load factor in line with prior year
 8% reduction in yield

Summer UK Trading to-date (Q1 2015/16)
 9% increase in passenger revenue versus prior year
 13% increase in capacity versus prior year
 31% of capacity already sold, 2ppts behind prior year due to year-on-year Easter shift

Operational Highlights
Platforms for profitable growth being established.
 New routes: Newly launched routes at London City and elsewhere being optimised with capacity diverted to the most successful. The optimised routes at London City are showing promising progress with load factors on the biggest reaching 70% only five months after launch.
 White Label: six year white label agreement signed with SAS, Scandinavia’s largest carrier
 MRO: eight and a half year contract signed with Airbus for maintenance of the Royal Air Force’s new fleet of 22 turboprop A400M Atlas airlifters at Brize Norton.

Significant headway in tackling key legacy issues.
 Exited the loss-making joint venture with Finnair
 Exited, without any penalties, the $1bn obligation to buy 24 additional E175 jets from Embraer with a simultaneous agreement to secure young, attractively priced turbo-prop Q400s
 Signed landmark deal with Bombardier to upgrade the reliability of Flybe’s 45 Q400 aircraft
 Found solutions through Project Blackbird for 7 of the surplus 14 E195 jets including a new agreement with Cardiff Airport utilizing two of these. In active discussions to find a permanent solution for the remaining 7 jets.

Saad Hammad, Chief Executive (pictured), 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.”