Flybe (FLYB) chief executive Jim French has agreed to hand over the controls of the airline during the first half of next year. Whoever takes the hot seat will have a job on their hands, though. Conditions are the toughest in a decade and its core UK domestic market is showing "little sign of recovery".
Fewer business passengers and a massive fuel bill landed the regional airline in the red during the first half. While holidaymakers are still jetting off to continental Europe, business travellers are not. Passenger numbers at Flybe UK fell by 200,000 to 4m in the six months to September, yet the carrier spent almost £69m on fuel, around £12.7m more than in the first half of last year, which helps explain the nose-dive in operating profit from £16.7m to just £1.1m. Losses at Flybe Finland - a tie-up with Finnish flag carrier Finnair - hit £2.4m during the period. It's not expected to make money for another couple of years. Fewer planes in the air also means less demand for maintenance and repair work, so Flybe's aviation support business doubled its losses to £0.9m. A cost-cutting programme is under way there.
There is some good news, though. Ticket sales for the quieter winter months are up 2.5 per cent and trimming capacity should help, too. Flybe also wants to cut costs by £2 per seat over the next 12 months - so job losses look inevitable.
Broker Investec Securities expects a full-year pre-tax loss of £14.5m, double the £7.4m deficit in 2012.
FLYBE (FLYB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 53p | MARKET VALUE: | £39.9m | |
| TOUCH: | 52-54p | 12-MONTH HIGH: | 80p | Low: 48p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 114p | NET DEBT: | 59% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 342 | 14.3 | 19.4 | nil |
| 2012 | 341 | -1.3 | -1.7 | nil |
| % change | - | - | - | - |
*Includes intangible assets of £10.2m, or 14p a share | ||||
