Regional air travel has been struggling in the UK, with high fuel costs and subdued passenger demand hitting the sector hard. Exeter-based airline Flybe (FLYB) has suffered more than most from excess capacity built up during the boom, resulting in a chronically high cost base. Getting on top of this problem is a priority for the company’s new chief executive Saad Haamad and management intends to slash capacity and shed a further 500 jobs in order to get the airline back on a level flight path.
The positive effect of an earlier round of cost-cutting was evident in these results. For example, strip out one-off currency gains on the dollar value of its fleet and a loss of £2.3m at this stage last year turned into a profit of £12.2m. It also helped that fuel costs, though still high, have remained steady at £69.4m. In addition, the company’s main market in the UK looks to have stabilised - passenger numbers here rose by 5.6 per cent to 4.3m, with a small increase in load factor to 68.6 per cent. Furthermore, Flybe’s share of its Finnish joint venture showed a small profit of £0.2m, compared with losses of over £2.1m in the firsta half of 2012.
Factoring in £13m of restructuring costs, Liberum Capital forecasts full-year adjusted pre-tax profits of £1m and EPS of 1.4p, compared with losses last time of £23.2m and a loss per share of 32.3p.
FLYBE (FLYB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 111p | MARKET VALUE: | £83.5m | |
| TOUCH: | 110-112p | 12-MONTH HIGH: | 115p | LOW: 40p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 67p* | NET DEBT: | 67% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012** | 341 | -1.6 | -2.0 | nil |
| 2013 | 351 | 13.8 | 18.1 | nil |
| % change | +3 | - | - | - |
*Includes intangible assets of £13.7m, or 18p a share ** restated | ||||
