Flybe profit up 14%
08.09.08
Flybe reported a 14% rise in first-quarter profits today. Despite ‘undoubted challenges’, the regional budget airline said it had performed strongly as its fuel-efficient fleet and hedging strategy protected it from surging oil prices. A lower dependence on leisure travel - with 80% of its capacity aimed at business and regular travellers - also helped to insulate it from the effects of the growing recession.
The airline increased its pre-tax profits 14% to £12.2m in the 3 months to June 30. Annual results for the year to March 31 also announced today showed record underlying pre-tax profits of £35.4m after successfully integrating BA Connect, the loss-making regional arm of British Airways bought in March 2007. The deal transformed Flybe into one of Europe's largest regional airlines and helped lift sales in the year by 46% to £536m.
However, Flybe's fuel cost per seat rose 44% over the 3 month period to the end of June due to the ‘unprecedented’ oil prices, but still accounts for less than 25% of its costs, compared to around 50% at rival Ryanair. A spokesman said that 60% of its fuel was hedged 12 months ahead, with only 10% completely unhedged.
Flybe operates 520 flights a day on over 190 routes to 12 countries, flying from Exeter, Manchester, Birmingham, Norwich, Southampton, Belfast, the Channel Islands and the Isle of Man. It is the UK's leading regional domestic airline with 35% of the market outside London. Next month it will become the second largest in Scotland after implementing a franchise deal with Loganair, which will see the Glasgow-based airline's 16 aircraft rebranded with the Flybe livery.
Flybe will look at potential acquisitions as rivals struggle in the tougher operating climate and the industry enters a period of consolidation, Chairman Jim French said. The airline is 69% owned by the family trust of late founder Jack Walker, with Mr French holding 7% and other management 9%. It plans to float next year.
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