10th Jun 2015 09:43
LONDON (Alliance News) - Flybe Group PLC Wednesday said it swung to a pretax loss in its last financial year as it was hit by revaluations of the hedges it has against the value of its aircraft, the costs of its surplus aircraft, and loss from its discontinued Finnish operations, although it improved the operational performance of its key UK airline business.
Flybe has made big losses in recent years, and had to embark on a wide-ranging restructuring programme in an effort to cut costs and return to profitability. That revamp has included cutting staff numbers, stopping unprofitable routes, exiting under-performing ventures, taking ownership of more of its own aircraft, switching to different aircraft, and finding homes for surplus aircraft. The massive restructuring effort is still showing up in the company's results, even as it continues to improve the operational performance of the remaining UK airline and white-label operations in the Nordics.
It reported a pretax loss of GBP35.6 million for the year to end-March, compared with a GBP8.6 million profit a year earlier, as it booked a GBP10.2 million negative non-cash revaluation of the dollar loans that are intended to be hedges against the value of each aircraft it has, which are valued in dollars. It also booked a GBP26.0 million cost for the surplus aircraft it has, a GBP12.0 million loss on its now discontinued Finnish business, and a GBP4.0 million provision for potential passenger claims for delayed and cancelled flights.
In the previous year, it had booked a GBP10.7 million restructuring charge that was offset by a GBP10.5 million profit from the sale of slots at Gatwick airport.
It said that if all those items were excluded, its pretax profit would have risen to GBP16.6 million, from GBP1.7 million, Flybe said.
"We have just completed the first full financial year of our three year transformation plan. Despite a more challenging environment than anticipated, significant progress has been made. There is much more to do. Flybe is back on track to recovery and profitable growth," said Chief Executive Saad Hammad.
Operationally, Flybe said passenger revenue per seat rose to GBP51.35 in the last financial year, from GBP49.70 a year earlier. It flew 7.7 million passengers, the same number as a year earlier, but it also cut capacity meaning its planes were more full. Load factor rose to 75.2% from 69.5%.
However, overall revenue fell to GBP574.1 million from GBP620.5 million due to a reduction in charter flying and the planned capacity reduction of 7.6%.
Flybe said it has cut a further GBP27 million of incremental costs in the year, on top of the GBP47 million reduction it made in the previous year. That means the GBP74 million of cumulative savings over the two years is GBP3 million ahead of a commitment it made in November 2013.
In the first quarter of the current financial year, it has seen a 1.7% decrease in passenger revenue per seat. It increased capcity by 13%, and has sold 65% of capacity, two percentage points down on this time last year.
Flybe shares were up 3.0% at 57.67 pence Wednesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Flybe Group