Flybe saw its profits almost halve to £6.8 million in the year to March and then faced a £12 million hit due to the Icelandic volcanic ash cloud chaos.
The annual figure compared with a pre-tax profit of £12.8 million a year earlier.
Passenger volumes and turnover remained “relatively stable” at 7.2 million and £570.5 million respectively, down from 7.3 million and £572.4 million respectively in the previous 12 months.
The carrier said trading for the first five months of the current financial year to the end of August had been strong.
Revenue and pre-tax profit is ahead of the same period last year, before the impact of the Icelandic volcanic ash cloud, Flybe said.
The volcanic ash disruption, which caused the unprecedented closure of much of Northern Europe’s airspace during April and May, affected Flybe’s network for nine days and cost the company an estimated £12 million or 2.1% of 2009/10’s annual revenue.
Chairman and chief executive Jim French said: “I am delighted with the results we achieved for the year to March 31, 2010.
“Against a backdrop of the continued impact of the recession and the effects of extreme volatility in fuel prices, Flybe grew its market share to become Europe’s largest regional airline and the UK’s largest domestic airline whilst also being one of only three major European airlines that have reported profits throughout the recession.”
Looking ahead, French added: ‘‘While the global economic outlook remains unclear, we remain optimistic that Flybe will continue to make strong progress during 2010/11, especially as a result of our recent deals with Air France and Embraer.
“We have a proven business model and strategy, and supportive owners.
“We have continued to grow our market share in the UK and have announced a string of exciting business developments which will accelerate the roll-out of the Flybe proposition into continental Europe, and we possess the flexibility within our fleet to accomplish this expansion.
“Our brand, which is already well established in the UK, is increasingly well known in Continental Europe and we continue to achieve operational efficiencies that significantly differentiate Flybe from other airlines.”