Flybe has admitted market conditions “remain challenging” in a trading update ahead of the announcement of 2011 full year results in June.

The UK arm of the regional carrier continues to focus on a number of initiatives to increase revenue per seat, further reduce costs and ensure capacity is optimally matched to demand.

Flybe said it would provide more details on with its full year statement. The trading update was well received in the City, Flybe shares ending trading yesterday 3% up to 71.5p following two previous profit warnings.

In a statement Flybe said group performed “in line with management expectations” through the final quarter of the year ended March 31.

Flybe UK, which contracted out two aircraft last month to Brussels Airlines, has maintained its leadership position in the UK regional and domestic markets, the company said.

Flybe Finland, a joint venture with Finnair, continues the expansion of its scheduled services, including routes to Sweden and Denmark, as part of plans to develop the business into the leading regional carrier in Northern Europe.

There has been increased demand for third party aircraft maintenance from European regional airlines for its aviation support division. Flybe’s training academy will benefit from a recently commissioned second flight simulator.

“Although market conditions remain challenging, we have a robust and flexible business model combined with clear and achievable growth plans,” the statement said. “We remain confident about Flybe’s long term future.”