Flybe shares nosedive after fall in revenue
SHARES in Flybe Group nosedived nearly 26 per cent yesterday after the Exeter-based budget airline said it would only break even before tax in its financial year ending in March.
The embattled carrier, which is attempting a three-year turnaround, said revenues fell by 3.8 per cent to £127m in the quarter from October to the year end. Meanwhile seat capacity fell 6.1 per cent to 2.5m seats, which the airline said was in line with its strategy.
Flybe posted its first-pre-tax profit in four years in the year ending March 2014, helped by brutal cost cuts that involved giving up airport slots, slashing jobs, exiting unprofitable flight routes and grounding surplus fleet.
Chief executive Saad Hammad noted that the airline was operating in a tough environment and said: “We have responded to that by keeping our fares low and launching new routes. Having removed nearly a $1bn of future liabilities over the course of this year in relation to the firm legacy order for additional Embraer E175 aircraft and ongoing losses of Flybe Finland, we are making solid progress towards finding a solution to our remaining legacy issue, Project Blackbird.”
Project Blackbird is Flybe’s effort to negotiate its way out of a lease contract for nine excess Embraer E195 planes, which it says cost £26m a year.
Flybe said that although there had been “significant reductions in fuel prices” because of the oil price slump and the dollar strengthening against the pound, they would have “no beneficial effect” in 2015 for Flybe because it had already hedged on their value.
Shares closed down 25.56 per cent.