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Flybe Group Plc (FLYB)

  Print          Annual reports

Wednesday 27 July, 2016

Flybe Group Plc

Q1 2016/17 Trading Statement

RNS Number : 3242F
Flybe Group PLC
27 July 2016

Flybe Group plc

('Flybe' or 'the Group')                                                                 


27 July 2016






Flybe reports a solid start to the year, with sustained passenger and revenue growth, in a challenging revenue environment with significant yield pressure across the sector driven by a slow-down in demand growth, accelerating industry wide capacity growth and repeated industrial unrest in France which accounts for c12% of Flybe's seat capacity.


Revenue growth continued

·      15.5% increase in seat1 capacity to 3.2m seats (Q1 2015/16: 2.8m seats)

·      9.2% growth in passenger2 numbers to 2.3 million (Q1 2015/16: 2.1m passengers)

·      5.0% growth in passenger revenue3 to £155.8m (Q1 2015/16: £148.4m)

·      This growth is delivered despite a slow start in April and demand headwinds stemming from continued fear of terrorism, concerns about macro-economic volatility and uncertainty around the EU referendum vote.


Route network enhanced and expanded

·      Improved schedule quality on 52 existing routes via frequency increases

·      24 new routes launched

·      New codeshares launched with Virgin Atlantic and Air India

·      New franchising arrangement launched with Blue Islands


Unit revenue erosion contained

·      3.9% decrease in passenger yield4 to £68.39 (Q1 2015/16: £71.15)

·      4.1ppts decrease in load factor5 to 70.0% (Q1 2015/16: 74.1%)

·      9.1% decrease in revenue per seat6 to £47.95 (Q1 2015/16: £52.73)

Continued reduction in unit costs

·      3.2% reduction in UK cost per seat (including fuel) from £53.24 to £51.52

·      0.3% reduction in UK cost per seat (excluding fuel)


New three year pay deal for all employees after successful union ballots (pilots, cabin crew and engineers)

·       Pay increases agreed at an average of 2% per annum for the next three years

·       Employee alignment with shareholders through a proposed 5% of salary share grant that will be implemented by September, subject to AGM and court approvals


Recognition for strong and improved punctuality

·       Flybe was ranked by the CAA as the UK's most punctual airline last year for the second consecutive year. The CAA's punctuality statistics for airlines operating more than 30k flights a year showed that 84% of Flybe's flights were on time, ahead of Ryanair (82.1%), British Airways (72.7%) and easyJet (71.7%).

·       Flybe's performance also improved year-on-year from 82% to 84%, while overall industry performance was reported to have dropped from 79% to 76.6% over 2014.

·       In Q1 2016/17 Flybe's On Time Performance (OTP) has been impacted by ATC strikes and poor weather in line with other UK airlines and declined 5 ppts to 82.4% (arrivals within 15 minutes).


Q2 2016/17 current trading (capacity and bookings as at 25th July)

·      14% increase in seat capacity vs. prior year

·      1% increase in passenger revenue vs. prior year

·      48% of seats sold vs. 51% in the prior year

·      5% decrease in yield vs. prior year

·      11% decrease in revenue per seat vs. prior year


Impact of Brexit vote and other external developments

Whilst it is too early to judge the impact of the Brexit vote on Flybe, in the long run, Flybe's mission is unlikely to be affected in a significant manner by the form of the UK's new arrangements with the EU. The UK remains geographically part of Europe with continuing important cultural, social and economic links with the mainland. Flybe connects regional communities increasingly underserved by other airlines and alternative modes of transport, fulfilling a vital social and economic need, independent of political arrangements.


In the near term, however, consumer uncertainty about Brexit, its economic impact and repeated terrorist incidents could have a materially adverse impact on Flybe. Travel demand may weaken further if consumer and business confidence suffers, not least against a weaker pound.


Although Flybe has hedged 90% of its USD and fuel requirements for this financial year, the impact of a stronger USD since the EU referendum vote will have a negative impact of £2.5m on full year profit, if rates remain at current levels, all things being equal.


Saad Hammad, Chief Executive Officer, said:


"Flybe continues to make progress despite significant external challenges. We delivered a solid quarter through vigorous commercial execution and enhanced operational delivery.


"The current outlook is very uncertain and we have limited forward visibility due to our late booking profile. We are yet to see the full impact on demand of the devaluation of sterling and the heightened consumer uncertainty after the Brexit vote. It is also too early to assess the potential demand impact of recent terrorist attacks.


"We are continuing to take action to reduce unit costs and moderate our seat capacity growth, as demonstrated by our recent deal with NAC to cancel a contractual obligation to lease an incremental 9 aircraft. While we currently face significant external risks, we have a strong balance sheet and cash position as well as a disciplined and resilient organisation to take us forward."




Philip de Klerk, Chief Financial Officer



Tel: +44 (0)20 7379 5151



Neil Bennett

Andy Donald

Tel: +44 (0)20 7379 5151


Flybe UK KPIs

Quarter to
30 June 2016

Quarter to
30 June 2015


Seats and passengers

Scheduled seats (million)




Passengers (million)




Load factor (%)





Passenger revenue (£m)




Contract flying revenue (£m)




Revenue from other activities (£m)




Total Flybe UK revenue (£m)





Passenger yield (£)




Passenger revenue per seat (£)







Flybe UK's current hedge books7 @ 15 July 2016 are summarised below (all hedges are forward swaps).


Jet fuel

·      Q2 2016/17 - 96% hedged at $561 per tonne

·      H2 2016/17 - 93% hedged at $538 per tonne

·      H1 2017/18 - 65% hedged at $476 per tonne


US Dollar

·      Q2 2016/17 - 98% hedged at $1.52

·      H2 2016/17 - 90% hedged at $1.50

·      H1 2017/18 - 73% hedged at $1.45



·      Calendar year 2016 - 100% hedged at €7.53 per tonne

·      Calendar year 2017 - 52% hedged at €8.60 per tonne


Flybe UK currently has a broadly neutral position in Euro income and expenditure.






1.             Seats represent the number of scheduled seats flown on Flybe scheduled services.

2.             Passengers are customers with an issued ticket where the ticket has charged a fare and/or a passenger surcharge and tax (if applicable).  This includes customers who purchase a ticket and do not show up for the flight where, as is usually the case, the ticket is non-refundable.

3.             Passenger revenue represents total ticket and ancillary revenue including hard block, Unflown APD less refunds (2015/16 Q1 Trading Statement stated passenger revenue of £147.7m excluded hard block).

4.             Passenger yield represents passenger revenue per passenger (2015/16 Q1 Trading Statement stated passenger yield of £70.33).

5.             Load factor is the number of passengers divided by seats flown.

6.             Passenger revenue per seat has been restated using the new definition for passenger revenue (2015/16 Q1 Trading Statement stated £52.12). 

7.             Based on anticipated fuel, USD and carbon requirements.


The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.


Forward-looking statements:

Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.


Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and Flybe Group plc ("the Group") plans and objectives for future operations, including, without limitation, discussions of the Group's Business Plan, expected future revenues, financing plans and expected expenditures. All forward-looking statements in this report are based upon information known to the Group on the date of this Trading Statement. The Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


It is not reasonably possible to itemise all of the many factors and specific events that could cause the Group's forward-looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of the business. Further information on the primary risks of the business and the risk management process of the Group is given in the Annual Report and Accounts 2015/16; these documents are available on

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