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Many positives in Flybe’s 1Q15/16 trading

Flybe’s trading statement for the first quarter of the 2015-2016 financial year (1Q15/16) shows a positive start to the year with sustained passenger and revenue growth as it continues the next chapter of its transformation.
Capacity grew by 12.3% from 2.5 million seats in 1Q14/15 to 2.8 million across the same period for this financial year. This is the result of 30 new routes launched for summer 2015 including nine from Cardiff and nine from Bournemouth. Flybe has also implemented winter frequency increases on key routes to address the needs of time-sensitive travellers.
During 1Q15/16, Flybe also signed a new codeshare with Emirates on 25 Flybe routes across the UK.These developments have led to a 9.8% growth in passenger numbers to 2.1 million in 1Q15/16 in comparison to 1.9 million passengers in 1Q14/2015. Although this means a 1.7 percentage point decrease in load factor to 74.1% from 75.8% in 1Q14/15, interestingly passengers tend to be spending more on average. This is indicated by an 11.6% growth in passenger revenue across the same respective periods. Passenger revenue totalled £147.7 million for 1Q15/16 in comparison with £132.3 million in the respecttive period last year.
These figures can be broken down to show a 0.7% improvement in passenger yield. Across 1Q14/15 the average revenue unit per passenger stood at £69.81, whereas this year the figure is £70.33. Elsewhere, the 1.6% decrease in revenue per seat to £52.12 for 1Q15/16 from £52.94 in 1Q14/15 is somewhat balanced by a continued reduction in unit cost per seat in the UK. This year the decrease was 3.4%, with the cost equalling £51.92.
“As we enter the next phase of our transformation, Flybe has again delivered revenue and passenger growth in the quarter, demonstrating the strength of our core business,” explained Saad Hammad, Flybe’s CEO. “We carried significantly more customers than the same time last year and maintained our industry-leading punctuality levels. We remain focused on tackling the surplus Embraer 195 aircraft, our final legacy issue, and are actively pursuing a range of solutions.”
Flybe estimates that its seven surplus E195s will incur a maximum exposure of £80m over four years, but says exit costs are being targeted significantly below this figure.
Based on current trading, Flybe estimates that 2Q15/16 will see a 16% increase in capacity and an 11% increase in passenger revenue in comparison to the previous year, meaning 2Q15/16 performance will be slightly better than 1Q15/16. The carrier predicts the yield will also increase, but similarly to 1Q15/16, the number of seats sold and the revenue per seat will decrease slightly.

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