Flybe beats challenges to post profits rise
Monday 08 September 2008
Regional airline Flybe today shrugged off the misery gripping the sector with a 14 per cent rise in first-quarter profits.
Despite "undoubted challenges", the carrier 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 per cent of its capacity aimed at business and regular travellers - also helped to insulate the business, Flybe said.
The carrier, which flew more than seven million passengers last year from airports including Exeter, Manchester and Birmingham, increased pre-tax profits 14 per cent to £12.2 million in the three months to June 30.
Flybe's fuel cost per seat rose 44 per cent over the three month period due to the "unprecedented" oil prices, but fuel accounts for less than 25 per cent of its costs.
The airline's investment in modern aircraft has also paid off as it said it would have to pay around £33 million more for its fuel with the fleet it operated in 2002.
The firm added that around 60 per cent of its fuel was hedged 12 months ahead, with only 10 per cent completely unhedged.
"Our objective is to smooth the cost of fuel and de-risk the cost escalation as far as possible," chairman Jim French said.
Flybe operates more than 190 routes to 12 countries, also flying from Norwich, Southampton, Belfast, the Channel Islands and the Isle of Man.
It is now the UK's leading regional domestic carrier with 35 per cent of the market outside London.
Next month the firm will become the second largest airline in Scotland after striking a franchise deal with Loganair, which will see the Glasgow-based carrier's 16 aircraft rebranded with the Flybe livery.
Flybe will also look at potential acquisitions as rivals struggle in the tougher operating climate and the industry enters a period of consolidation, Mr French added.
Annual results for the year to March 31 also published today showed record underlying pre-tax profits of £35.4 million after successfully integrating BA Connect, the loss-making regional arm of British Airways bought by the group in March 2007.
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