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Flybe Group PLC Q3 2016/17 Trading Statement

Direct News Source

30-Jan-2017 FLYBE delivered a solid quarter in tough trading conditions

Flybe continued to grow revenue in Q3 by deploying previously committed additional capacity, but increased capacity and tough trading conditions resulted in lower load factors. As we passed the anniversary of last year's tragic events in Paris and with the benefit of management actions, seat capacity growth started to slow, passenger yield increased and the decline in revenue per seat slowed:

 -- 13.5% growth in Passenger revenue in Q3, compared to 5.7% in H1 -- 12.7% growth in Q3 seat capacity slowed against 13.5% growth in H1 -- 2.8% growth in passenger yield compared to 2.0% decrease in H1 -- 1.7 ppts decline in load factor slowed against 4.3 ppts decline in H1 -- 0.2% increase in passenger revenue per seat against 6.9% decrease in H1 

As planned, four additional Q400 aircraft were added to the fleet during the quarter and the final four will be delivered in the last quarter, which will complete the NAC transaction and represents the peak in fleet size. We have now given notice to lessors that the next six end-of-lease aircraft will be returned in the second half of 2017/18.

UK regional connectivity will be increased with new routes between Edinburgh, Aberdeen and London Heathrow, which commence on 26(th) March 2017. These routes will allow for connectivity with Flybe's codeshare partners, including Etihad, Singapore Airlines and Virgin Atlantic as well as interline connections with United Airlines, Delta, Qantas, TAP and Cathay Pacific. More connectivity will be added over the coming months.

As previously announced Christine Ourmieres-Widener joined as our new CEO on 16(th) January 2017.

Q4 2016/17 current trading

Uncertain customer confidence and poor weather have contributed to a slow start to this quarter. Trading data three weeks into Q4 was as follows:

 -- 11% increase in passenger revenue vs. prior year -- 13% increase in seat capacity vs. prior year -- 1% decrease in yield vs. prior year -- 38% of seats sold vs. 38% in the prior year -- 1% decrease in revenue per seat vs. prior year 

Christine Ourmieres-Widener, Chief Executive Officer, said:

"I have only just started work as CEO at Flybe. However, everything I have seen so far confirms my excitement at the opportunity we have to become the best regional airline in Europe. There is much to be done, but we have the firm foundations needed to develop the business. My first priority is to look to rebuild passenger unit revenue and to challenge all our costs. This will be assisted by Flybe becoming an even more customer-focussed business as we achieve greater control over our fleet size."

 Enquiries: Flybe Tel: +44 (0)20 7379 Philip de Klerk, Chief 5151 Financial Officer Maitland Tel: +44 (0)20 7379 Andy Donald 5151 

Flybe UK KPIs

 Quarter Quarter Change to to % 31 Dec 31 Dec 2016 2015 ------------------------------- -------- -------- ---------- Seats and passengers Scheduled seats(1) (million) 3.1 2.8 12.7 Passengers(2) (million) 2.1 1.9 9.9 Load factor(3) (%) 67.2 68.9 (1.7)ppts ------------------------------- -------- -------- ---------- Revenue Passenger revenue(4) (GBPm) 146.3 128.9 13.5 Contract flying revenue (GBPm) 8.7 3.8 127.4 Revenue from other activities (GBPm) 5.8 3.5 67.0 ------------------------------- -------- -------- ---------- Total Flybe UK revenue (GBPm) 160.8 136.2 18.1 ------------------------------- -------- -------- ---------- Yield Passenger yield(5) (GBP) 69.53 67.66 2.8 ------------------------------- -------- -------- ---------- Passenger revenue per seat(6) (GBP) 46.72 46.61 0.2 ------------------------------- -------- -------- ---------- 

Cost per seat(7) , in constant currency and including the benefit of lower hedged fuel prices, reduced by 3.4%. Excluding fuel and in constant currency, cost per seat increased by 1.6% due largely to growth of our White Label business with SAS and increased delay and diversion costs resulting from the bad weather in December and higher EU261 charges.

Hedging

Flybe UK's current hedge books at 25(th) January 2017 are summarised below

Jet fuel

 -- Q4 2016/17 - 99.2% hedged at USD 545.41 per tonne -- H1 2017/18 - 91.0% hedged at USD 483.29 per tonne -- H2 2017/18 - 71.4% hedged at USD 492.22 per tonne 

US Dollar

 -- Q4 2016/17 - 90.5% hedged at USD 1.4566 -- H1 2017/18 - 91.5% hedged at USD 1.4143 -- H2 2017/18 - 77.4% hedged at USD 1.4244 

Carbon

 -- Calendar year 2016 - 100% hedged at EUR4.47 per tonne -- Calendar year 2017 - 100% hedged at EUR3.02 per tonne 

Flybe UK's exposure to Euros has increased and is under review for hedging.