Posted on: 07 April 2016 by Mark Howells
Flybe has published a trading update for the fourth quarter of its fiscal year ending 31 March 2016 (4Q16) ahead of publication of its FY2016 results on 9 June 2016, with initial results for the full year to March 2016 expected to be in line with market expectations.
The airline reported stable yields against a 2.4% increase in seat capacity over the 4Q15 figure, although the load factor of 68% was 2 percentage points down. Passenger volumes were maintained at 1.8 million.
During 4Q16, and as previously announced, seat capacity was increased at a temporarily lower rate of 2.4% in response to the terrorist events in Paris in November 2015. This ensured that Flybe mitigated lower load factors with stable yields and delivered passenger volumes and revenue in line with 4Q15.
In March 2016, Flybe took ownership of three Q400 aircraft, previously on operating leases, at a cost of $34 million. This is part of Flybe moving its aircraft fleet away from reliance on operating leases and towards outright ownership which brings the associated margin uplift. Flybe's cash position remained strong at 31 March 2016 with total cash of £171.3 million.
In view of ongoing macro-economic uncertainty, Flybe has now hedged both fuel oil and US dollar to 90% of 2016/17's exposure. The rise in the value of the dollar since the turn of the year has impacted 2016/17's operating costs by £7 million.
Flybe’s chief executive Saad Hammad commented, “This last year has seen enormous progress at Flybe. We completed the resolution of the key legacy issues while significantly improving our service and customer offering. We are carrying more passengers across a growing route network and doing so at a lower unit cost.
“Against the background of the highest level of market capacity growth for six years driven by low fuel prices, we continue to be disciplined in deploying our capacity, focusing investment on routes where airport partners provide cost mitigation and those which adhere strictly to our business model,” added Hammad. “We are also continuing to reduce unit cost, which provides margin resilience, as well as reviewing our capacity growth rate beyond this summer. We look forward to making further progress over the coming year as we enter the next chapter of our journey which is focused on disciplined and profitable growth."