Flybe dropped into the red in the 12 months to March – the first full financial year of a three-year turnaround plan.
The regional carrier recorded a pre-tax loss of £35.6 million against a profit of £8.1 million in 2013-14.
This came despite 65 job cuts, a restructure of the route network and the sale of a loss-making joint venture in Finland during the year.
However, the carrier claimed that there are “a number of one-off and technical items that mask the underlying profit performance”.
The loss before tax was affected by non-cash revaluations on US dollar loans intended to be hedges against the value of each aircraft, whose value is denominated in dollars, according to the airline.
The UK-based business would have made a profit of £16.6 million if this and other items were excluded, Flybe reported this morning.
The airline’s costs were cut by £27 million in addition to £47 million-worth of reductions in the 2013-14 financial year.
Passenger numbers remained the same as the previous year at 7.7 million but with an improved load factor of 75.2%, described as an annual all-time high.
Group revenue fell by 7.5% to £574.1 million due to a cut in charter flying and a 7.6% reduction in capacity.
The airline is also “pursuing multiple options” to offload seven Embraer E175 jets which are surplus to requirements.
Flybe’s annual results statement said: “Having considered the forecasts and making other enquiries, the directors have a reasonable expectation that Flybe has adequate resources to continue in operational existence for the foreseeable future.”
The carrier said it is now returning to revenue and capacity growth as it enters the next chapter of its transformation.
Capacity in the first quarter of the current financial year has been raised by 13% with 65% of all seats sold but with a 1.7% decline in passenger revenue per seat.
Chief executive, Saad Hammad, said: “We have just completed the first full financial year of our three-year transformation plan.
“Despite a more challenging environment than anticipated, significant progress has been made.
“There is much more to do, but I am keen to put on record my thanks to all our pilots, cabin crew, engineers and everyone in the field and at HQ in Exeter for their commitment and effort.
“Flybe is back on track to recovery and profitable growth.”