Join our community of smart investors

Legacy issues drag on Flybe

Overly optimistic expansion plans resulted in greater capacity without more passengers to fill the new seats
June 12, 2017

Legacy issues continue to haunt Flybe (FLYB). Overly optimistic expansion plans had included ordering more planes, which increased capacity in the reported period by 12.3 per cent to 12.7m seats. But passenger numbers have failed to keep up, increasing by 7.6 per cent to 8.8m. More seats without the passengers to fill them pushed the load factor down 3 percentage points to 69.6 per cent. Per-seat revenue fell 4 per cent to £48.84.

IC TIP: Hold at 33.0p

New chief executive Christine Ourmieres-Widener has put forward a six-point turnaround plan that includes looking for ways to reduce costs and improving the airline's online presence. The airline reached its peak fleet size of 85 in May and will gradually reduce its capacity, starting with returning six planes when their leases expire. The ongoing systems upgrade has been another stress on the income statement, with a £4.8m IT write-down in the year to March and another £6m of contract cancellation costs expected in the year to March 2018.

Analysts at Numis expect pre-tax profit of £1m in FY2018, giving an EPS of 0.39p, compared with losses of £1.9m and 12.3p in FY2017.

FLYBE (FLYB)
ORD PRICE:33pMARKET VALUE:£71.5m
TOUCH:32.8-33p12-MONTH HIGH:57pLOW: 30p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:71pNET DEBT:42%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013614-41.1-56.0nil
20146218.19.6nil
2015574-23.6-16.5nil
20166242.73.1nil
2017707-19.9-12.3nil
% change+13--497-

Ex-div: na

Payment: na