Thursday 19 July 2018

Flybe profits nosedive by 47pc after surging costs

Flybe boss Christine Ourmieres-Widener. Photo: www.keitharkins.com
Flybe boss Christine Ourmieres-Widener. Photo: www.keitharkins.com

Holly Williams

UK airline Flybe has revealed half-year profits nearly halved after it was hit by higher-than-expected aircraft maintenance and IT costs.

The firm, which warned over interim earnings last month, posted underlying pre-tax profits of £8.4m for the six months to September 30, down from £15.9m a year earlier.

But shares edged higher as the result came in towards the top end of the range given in the group's October profit alert, when it had said profits could fall by up to 69pc.

The carrier's results were knocked by a drive to improve the reliability of its planes, in particular the Bombardier Q400 turboprop, as well as additional IT costs of £6m linked to the development of a new digital platform, while the weak pound also took its toll.

Chief executive Christine Ourmieres-Widener said: "While half-year profits are lower than last year, due to the one-off IT contract costs, higher maintenance expenses and the impact of the fall in the value of sterling, I am confident that we are on a clear path to sustainable profitability through the investments and improvements we are making at Flybe."

She added the group would focus in its second half on improving its cost base and reliability performance, as well as ploughing on with investment in its new online system.

But Flybe - which carries around 8.8 million passengers across 199 scheduled routes - warned the European airline market remains "challenging".

Half-year figures showed it has slowed its UK seat capacity, with growth pairing back to 3pc, while passenger numbers rose 8.8pc to 5.2 million.

Its load factor - a key measure of how well it fills it planes - improved as a result, to 76pc from 72pc a year earlier.

Flybe said trading remained "encouraging" in the start of the second half so far, with 54pc of seats sold against 50pc a year ago.

The group was sent swinging to a loss last year after slowing consumer demand and over-capacity.

The firm posted a £19.9m pre-tax loss in the year to March 31, compared with a profit of £2.7m the previous year.

Airline analyst Gerald Khoo at Liberum said the latest set of interim results showed an "encouraging" commercial performance.

He said: "As capacity growth has slowed, load factors and unit revenues have improved considerably.

"However, a number of cost headwinds impacted the bottom line, and while some will not recur, we believe caution is warranted."

Press Association

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