Flybe’s share price rises on promising results as budget airline’s turnaround plan gains momentum
Flybe's share price soared today on the back of results suggesting the budget airline was gaining momentum in its turnaround.
The figures
There was a 13 per cent increase in passenger revenues over the three months to the end of September, but around a one per cent decrease in revenue per seat.
Passenger numbers increased 1.7 per cent, to 2.4m in the quarter, up from 2.1m the year before, and there was a 13.8 per cent increase in seat capacity- up to three million.
The load factor, which is number of passengers divided by the number of seats flown, actually decreased from 80.5 per cent in the second quarter of last year to 78. 3 per cent, meaning the airline was less busy.
Flybe's share price was up 7.57 per cent in early afternoon trading.
Why it's interesting
The listed budget airline is in the middle of a three-year restructuring plan after struggling with mounting costs and issuing a string of profit warnings following its over-hyped flotation in 2010.
Since then the embattled group has laid off hundreds of jobs and sold 25 precious slots at Gatwick airport to cut costs. It also raised £150m from shareholders to fuel its recovery last year and launched new routes out of City airport to compete with its bigger rivals.
Last week the group signed a deal with Rigby Group-owned Regional & City Airports (RCA) to enable flights to run from Exeter and Norwich to mainland Europe from next March, in another major boost for the company.
Numis analyst Wyn Ellis said: "The first trading update in July highlighted a positive start to the year and we consider it encouraging that this momentum has been maintained, with greater stability regarding forecasts and the outlook . The legacy fleet issue is slowly but surely being resolved.”
What they said
Chief executive Saad Hammad said: “Flybe's turnaround continues, with our third successive quarter of revenue, capacity and passenger number growth, against the very competitive market provided by other airlines and road, rail and ferry services.
“In our second year of transformation, Flybe's performance in its core business is on track. We are also determined to finish redeploying our surplus Ejet aircraft.”
In short
Some of the positive trends seen over the last two quarters have continued, although there may still be patches of turbulence as revenue per seat needs to increase.