Flybe posts profit as cost cutting pays off

Wednesday 11 June 2014 08.38
Flybe's revenue for the year to end of March rose 1% to £620.5m
Flybe's revenue for the year to end of March rose 1% to £620.5m

British airline Flybe Group posted its first pre-tax profit in four years, beating market estimates, as cost-cutting measures it undertook paid off.
              
The regional airline also made a good start to full-year 2015 and was trading in line with its expectations, chief executive SaadHammad said in a statement.

Flybe kick-started a turnaround programme last January, trimming costs by giving up airport slots, cutting jobs, exiting unprofitable flight routes and grounding surplus fleet. 

These measures helped the budget carrier swing to a pre-tax profit of £8.1m for the year to the end of March. It had reported a pre-tax loss of £41.1m a year earlier.

Revenue jumped 1% to £620.5m. Analysts on average had expected a pre-tax profit of £6.4m, on revenue of £623.9m. 

"The return to profitability is a great step forward. This enables us to start implementing our twin-engine strategy of growing our UK branded business and our white label operations across Europe," Hammad said.

Although Flybe has issued a string of profit warnings since listing on the London Stock Exchange in 2010, a recovery in the UK economy could buoy prospects for the carrier, whose interests are split between business and leisure customers. 

Flybe said the general economic outlook in its most important market, the UK, has improved, with a 1.9% growth reported in the year to December 2013. 

Most commentators are expecting 2014 to see growth in the range of 2.4-3.5%, Chairman Simon Laffin said. 

Flybe, which serves 35 UK airports, also flies people from the UK to other European destinations.

Profits at a number of European airlines have been under pressure over the past few years as cash-strapped customers sparingly took flights in the years after the economic meltdown of 2008.

This added to the burden of soaring fuel costs and higher airport charges.