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Trading statements

Flybe to continue to reduce costs

29 March 2017 09:06

Flybe has confirmed that it would continue to reduce costs to improve efficiency and stop unprofitable flying to combat competitive conditions in the market.

Flybe said the fourth quarter had been characterised by weak demand in an uncertain consumer environment, together with price competition arising from overcapacity among airlines and sharpened price activity from rail operators.

It said weather-related and operational cancellations, as well as industrial action mainly by French air traffic controllers also impacted revenue.

Flybe said it responded by taking further action on cost and reducing the capacity it flew.

As a result, Flybe slowed its year-on-year seat capacity growth further to 10% (Q3: 12.7%).

And it said that although load factor fell by around 1.4 ppts year-on-year in the final quarter, this was an improvement compared to the previous quarter's 1.7 ppts reduction.

Passenger yield rose by 2.9% in Q4 (Q3: 2.8%).

As a result, estimated passenger revenue rose by 9.8% in the final quarter (Q3: 13.5%).

An update said: "Flybe is planning a major upgrade to its core systems, which will significantly improve the customer experience and allow greater ecommerce activities.

"As a result, a full review of software assets and IT contracts is being conducted which is expected to result in additional cost and non-cash write downs, which could impact profit by around £5m to £10m in the current financial year.

"Excluding this, adjusted profit before tax for the year ended 31 March 2017 is expected to be a small loss."

Chief executive Christine Ourmieres-Widener said: "I continue to be very excited about the opportunities in Flybe, especially as we are now able for the first time to take control of our fleet size to reduce overcapacity.

"Flybe is increasingly a digitally enabled business, with 80% of bookings already being made via our website.

"To seize this opportunity, we must first rebuild some of our core systems and this is now starting. We shall continue to reduce costs, work with our partners to improve efficiency and stop unprofitable flying."

At 9:06am: (LON:FLYB) FlyBe share price was -2.62p at 40.38p

Story provided by StockMarketWire.com

Related Company: FLYB

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