Exeter-based Flybe this morning announced a £1.3 million loss in profits in its interim financial report.
The airline blames high fuel costs for the drop, which it says it couldn't pass on to its customers and is campaigning to reduce tax for domestic flights.
Flybe's Chairman and CEO, Jim French, comments "Our performance for the six months to 30 September 2012 has been in line with the revised expectations set out in our Interim Management Statement of August 2012.
“The continuing challenges of the UK domestic aviation market further validate the importance of our decision to focus Flybe’s long-term strategy on rebalancing our route network by growing our European operations.
“I am delighted to report that Flybe Finland, our joint venture with Finnair, has continued its impressive trajectory of growth, with an additional 12 E-series jets now transferred from Finnair into Flybe Finland on a contract flying basis. Finnair is delighted with this relationship which they have publicly stated has enabled them to reduce their overall costs significantly. I am encouraged by the continuing dialogue that Flybe Europe’s management team are having with other parties seeking similar arrangements.
“The UK domestic aviation market continues to show little sign of recovery, with the market trending a year-on-year decline. Since this represents c75% of Flybe UK’s passenger base, this decline continues to pose challenges on our UK business.
“Flybe UK maintained its market leading brand position with a 29.1% share of the UK domestic market and 52.6% of the regional UK market. Forward passenger sales revenue for winter 2012/13 at 6 November 2012 is ahead by c2.5% year-on-year and our proactive approach on capacity management means seats flown for the winter period will be about 1% to 2% down against the previous year. We are also working on a range of cost saving initiatives over the next 12 months, targeting an annual saving of £2 per seat.
“APD continues to be a burden to the industry and one that impacts disproportionately on Flybe compared to those with significant operations outside of the UK. We are actively lobbying for some changes in this area although we recognise this will be a long term project.
“While we recognise the current challenges being faced across the Group, we are addressing those challenges and believe that our long-term strategy is one which will continue to rebalance our Group activities. We remain confident in Flybe’s future prospects.
"Flybe remains absolutely committed to our Exeter base, we have our engineering business there, we have our new training academy there, we have scheduled services of Exeter. All regional airports have suffered during the last four to five year recession and Exeter is no different from any other. We have reduced our operation over the year, but we still have a very solid core of business at Exeter. The Westcountry has enjoyed a real benefit through the investments that the RDA and previous bodies have made, supporting us with engineering developments and the training academy were really wise investments because they really have underpinned all the jobs at Exeter."
For the further information go to http://www.flybe.com/corporate/pdf/Flybe-Group-plc-Half-year-report-September-2012.pdf