Revenue Strengthens As Results Are In Line With Expectations
Flybe today announces its results for the year ended 31st March 2018. The adjusted loss before tax of £20.5m is in line with market expectations.
The initial stage of the Sustainable Business Improvement Plan (‘SBIP’) has delivered significantly improved commercial performance, with load factor growing by six percentage points and a 10.1% increase in revenue per seat.
As we announced at H1 2017/18, we have invested in improving the performance of our Bombardier Q400s to enhance further our aircraft reliability and on-time performance.
We have also commenced our digital transformation to improve the customer experience and bring improved operational efficiency.
The additional maintenance costs, onerous IT contract provision, reduced hedging gains and the weather disruption in Q4 have, however, resulted in the higher adjusted loss before tax figure.
Financial and operational highlights
· 6.4% increase in group revenue to £752.6m
· 10.1% improvement in passenger revenue per seat to £53.79
· 7.7% increase in passenger volumes to 9.5 million
· 6.0 percentage points improvement in load factor to 75.6%
· Adjusted loss before tax* increased to £19.2m.
As previously stated, we have invested to improve the technical reliability of our Bombardier Q400 aircraft which resulted in higher maintenance costs. Following a review of all options for our fleet configuration we recently confirmed that the Q400 remains the best aircraft for the core of our fleet. It offers a combination of superior fuel economy, greater power and cruise speed compared to other turboprops, and low noise footprint which makes it the optimal aircraft for our needs.
We plan to retain the Embraer E175 jets for longer and busier routes, reflecting their larger range and bigger size, with attractive economics for us on longer sector times, well ahead of any comparable regional jet.
Christine Ourmieres-Widener, Chief Executive Officer, commented:
“Flybe has made significant progress during my first full year as CEO. With our fleet size under control, we are already delivering significant improvements to passenger yield, load factors and revenue. Our Sustainable Business Improvement Plan, launched last year, is enhancing the business in a number of key areas including, network decision-making, revenue management and commercial performance. Profitability has however been impacted by higher maintenance costs, IT investment and the poor weather in the final quarter.
“We now have a new senior management team in place, with greater aviation experience, and we are all focused on delivering the business plan through continued improvements to revenue, a renewed focus on cost reduction and therefore achieving profitability.
“There is growing awareness of the importance of regional air connectivity, not just to the economy and in connecting people, but also in connecting customers to long-haul services with increased interest from legacy carriers. This is shown by the success of our new routes in Heathrow and the growth in our codeshares. Flybe has a unique position in UK connectivity and in its relationship with 9 million UK passengers.
“I look forward to a positive future and would like to thank all Flybe employees for their ongoing support and commitment.”
*Adjusted loss before tax is defined as the reported loss before tax adjusted for the revaluation of USD aircraft loans and the net aircraft onerous lease provision and related asset impairment.