Flybe revenues, profits up as turnaround starts to soar
Flybe's turnaround is starting to soar, with the budget airline returning to profitability as sales rise in the first half.
The figures
Flybe's group revenues were up 10.3 per cent to £339.6m for the six months to 30 September, while the firm turned last year's £3.3m loss into a £22.9m profit.
Cash generation improved, thanks to net inflows from operating activities of £21.3m, compared with £6.5m in 2014.
The UK-focused business increased seat capacity by 13.1 per cent to 5.9m, while there was a 10.2 per cent rise in the total number of passengers to 4.5m. Flybe now accounts for 51.2 per cent of the UK regional flights sector.
Why it's interesting
Flybe has completed three of the four "chapters" in its turnaround, including restructuring the business, relaunching it with new branding, and dealing with "all of its major legacy issues".
The next stage is to grow the airline profitability, and will focus on building its European capacity to do so. The company is hoping to become the best local airline in Europe, and its strategy is to operate high frequency services on "thin" regional routes – ones that aren't served by bigger airlines – to appeal to regional business travellers, who might otherwise go by train or car.
To that end, Flybe recently announced flights from Exeter and Norwich to Europe would start from March 2016.
What they said
Chief executive Saad Hammad said: "Our turnaround is on course with a very encouraging performance in the first half. We have returned to profit by delivering significant revenue growth through capacity investment and improved commercial execution, while reducing unit cost.
"Competitive pressures are expected to grow in the second half with industry-wide benefit from lower fuel costs and growth in seat capacity. Against this backdrop, we are remaining disciplined in cost control and our capacity growth plans. Our focus will be on building service frequency on our established routes to maximise our appeal to time-sensitive business travellers.
In short
With fuel prices low, it's a good time for airlines to push for growth and Flybe is building momentum in its turnaround. However Hammad's warning suggests management is not taking its eye off the challenges that could present themselves further down the road.