Flybe revises forecast amid ‘challenging’ year

Regional airline Flybe has warned revenue growth this year is likely to be below previous expectations amid challenging market conditions, particularly in Europe.

In a trading update released today, the carrier said passenger numbers in its first quarter were down 3% year on year to 1.9 million with load factors standing at 62.4% down from 63.1% in 2011.

Flybe UK generated total revenues of £156.4 million in the first quarter, up 0.7% on the same period last year. Group revenue increased by 1.6% to £163 million.

Operated seats flown were up 1.2% to 3.2 million. Scheduled seats flown were 3.1 million, down 1.8% on the same three month period last year.

Jim French CBE, chairman and chief executive, said: “2012/13 is proving to be another very challenging year in the European regional aviation sector with continued weak consumer markets and stubbornly high oil prices.

“After four years of consecutive decline, the UK domestic air market had shown signs of stabilising this year although June slipped back into 3% year-on-year decline.

“Whilst the UK to European leisure routes performed well in Q1, the UK to European business market has shown signs of weakness in recent months, leading to today’s revised trading outlook.

“We remain cautious over the outlook and do not expect a material recovery in either consumer or business confidence in the short term. We therefore remain focused on executing our comprehensive action plan to both grow the business whilst mitigating cost pressures.”

Flybe said that due to flying agreements with Finnair and Brussells Airlines by the end of this year 25% of the fleet under its management will be deployed on lower risk contract flying.

French added: “In addition, the launch of Flybe UK’s ‘Making flying better’ campaign received positive customer feedback and we have seen ‘New Economy’ sales as a percentage of online bookings increase from 14% to 24% in recent weeks, with our target being 30%.

“However, the removal of debit card fees as directed by the Office of Fair Trading has proved a further challenge to us this year.

“Flybe UK’s brand market share in the UK regions remains at above 50%, we have a robust and flexible business model and clear growth plans. Although we expect market conditions to remain challenging, we remain confident about Flybe’s long term future.”

Flybe will announce its interim results for the half-year ended September 30 on November 9.

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