Flybe half year profits have fallen by more than 47% due to an “onerous” one-off contract provision and heightened aircraft maintenance costs.
The regional airline today reported that adjusted pre-tax profit for the six months to September 30 dropped to £8.4 million from £15.9 million in the same period last year despite a 9.3% rise in revenue to £418.5 million.
The carrier plans to continue trimming capacity this winter as part of a plan to reduce the fleet size to around 70 aircraft over the next three years from a peak of 85 in May.
The aim is to focus our resources on fewer, more profitable routes, with five loss-making services already closed.
“This delivers improvement in our load factors and helps to maintain yield. Secondly, the greater stability in our route network will give operational efficiencies and better customer service,” Flybe said.
Efforts are also being made to improve reliability and on-time performance after this fell by 3.6 percentage points to 78.1% over the same period last year.
Looking forward, the airline said: “The European aviation market continues to be challenging, with many airlines impacted by excess seat capacity in the short-haul market, a weaker pound and both business and consumer uncertainty.
“Within this market, the board believes that Flybe offers a differentiated regional business model and has clear plans to deliver a sustainable profitable future helped by the plans to reduce capacity and cost.”
Advance sales for the current quarter show 54% of seats sold against 50% a year ago with a 9% rise in passenger revenue based on a 3% cut in capacity. Overall capacity is to drop by 4% in the second half of the financial year.
The carrier is overhauling its senior management with Air Seychelles CEO Roy Kinnear joining as chief commercial officer in January and a new digital IT platform planned with Amadeus.
CEO Christine Ourmieres-Widener said: “We have made good progress in the first half of the year and with our fleet size under control, we are already delivering improvements to passenger yield and load factors.
“Load factors are expected to continue to strengthen as the fleet reduces and we anticipate that yields will stabilise.
“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.
“In the second half, we will focus on improving our cost base and reliability performance while preparing the business for the future as we invest in the new digital platform.
“As the business model changes, I am particularly pleased to have a new senior management team with ever more aviation experience.
“I look forward to a positive future and would like to thank all Flybe employees for their ongoing support and commitment.”