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Flybe reduces size of fleet

The company wants to reduce the number of planes in its fleet as capacity concerns build in the European short-haul market
November 10, 2017

Capacity is always a concern for European airlines, and Flybe (FLYB) is no exception. As such, the company believes it prudent to reduce its fleet size from 85 planes to 70 over the next three years as part of a wider improvement plan. Capacity should start to fall during the second half of this financial year as it hands back six end-of-lease aircraft. This marks a 4 per cent reduction in capacity, and management reckons it will allow for better focus on fewer, more profitable routes and help to improve customer service. Over the last six-month period, capacity had risen by 3 per cent to 6.9m seats.

IC TIP: Sell at 37p

Load factor increased by 4 percentage points to 76 per cent, but this is well behind levels seen at European budget peers such as easyJet (EZJ) and Ryanair (RYA). Revenue per available seat rose 8.8 per cent to £55.29 but, excluding fuel, cost per available seat also increased by 10.1 per cent at constant currencies. Another aspect of the improvement plan is to make Flybe more punctual. Over the period the airline reduced flight cancellations by 35.3 per cent, but 'on-time' performance still slipped 3.6 percentage points to 78.1 per cent.

Analysts at Liberum expect a pre-tax loss of £15m in the year to March 2018, giving a loss per share of 6.9p, compared with losses of £6.7m and 6.2p in FY2017.

FLYBE (FLYB)   
ORD PRICE:37pMARKET VALUE:£80m
TOUCH:36.5-37p12-MONTH HIGH:51pLOW: 30p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE: 70pNET DEBT:44%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20163837.06.2nil
201741915.17.0nil
% change+9+116+13-
Ex-div:na   
Payment:na