Low-cost, regional airline Flybe has reported half-year profits down almost a half (47%). The company said the slump in profits was down to higher-than-expected aircraft maintenance and IT costs.
The firm, which had warned the City about interim earnings last month, posted underlying pre-tax profits of £8.4m for the six months to end of September, down from £15.9m a year earlier.
However shares edged higher in early trading as the result came in towards the top end of the range given in the group’s October profit alert, when it had said profits could fall by up to 69%.
The airline’s results were affected by a drive to improve the reliability of its planes, in particular the Bombardier Q400 turboprop, as well as additional IT costs of £6m linked to the development of a new digital platform. A weaker sterling during the period was another headwind to contend with.
Chief executive Christine Ourmieres-Widener said: “While half-year profits are lower than last year, due to the one-off IT contract costs, higher maintenance expenses and the impact of the fall in the value of sterling, I am confident that we are on a clear path to sustainable profitability through the investments and improvements we are making at Flybe.”
She added that the group would focus in its second half on improving its cost base and reliability performance, as well as ploughing on with investment in its new online system.
But Flybe – which carries around 8.8 million passengers across 199 scheduled routes – warned the European airline market remains “challenging”.
Half-year figures showed it has slowed its UK seat capacity, with growth pairing back to 3%, while passenger numbers rose 8.8% to 5.2 million.
Its load factor – a key measure of how well it fills it planes – improved as a result, to 76% from 72% a year earlier.
Flybe said trading remained “encouraging” in the start of the second half so far, with 54% of seats sold against 50% a year ago.
The group made a loss last year as a result of slowing consumer demand and over-capacity. The firm posted a £19.9mn pre-tax loss in the year to March 31, compared with a profit of £2.7m the previous year.
Airline analyst Gerald Khoo at Liberum told PA that the latest set of interim results showed an “encouraging” commercial performance. He said: “As capacity growth has slowed, load factors and unit revenues have improved considerably. However, a number of cost headwinds impacted the bottom line, and while some will not recur, we believe caution is warranted.”