Flybe SWOT: Europe's leading independent regional airline stalls again

Flybe is Europe's largest independent regional airline, the UK's biggest airline in the domestic regional market (i.e. excluding London), and it has no airline competition in most of its network. This sounds like the basis for printing money.

However, it struggles to make a sustainable level of profit. Flybe reported another net loss for the financial year to Mar-2018 - its sixth time in the red in the past eight years. This suggests that it may have a fundamental, structural problem, or may need better execution of its strategic aims.

It may be a bit of both. Regional airlines inherently have a high unit cost level and typically work best when focused on a narrow niche. Flybe overexpanded in the past and overcommitted to aircraft that were not best suited to its network.

In spite of a depressed share price, Flybe has not yet attracted a bid and must focus on self-help. It is now on a course of fleet reduction, focusing mainly on the Bombardier Q400, but also retaining the Embraer E175 for longer, thicker routes. This, together with tighter cost control, presents the opportunity for Flybe to seek a way to sustainable profitability.

This report considers Flybe's strengths, weaknesses, opportunities and threats.