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Flybe Share Lose 1/3rd Value

Flybe share lost 1/3rdplus value falling to 20.3p in early hours of trade which estimated the value of the firm to 68m pounds. A fleet reduced from the earlier 80 on March end to the current 78, the airline had to absorb a loss of 29m pounds; a result of the weakening pound and rising fuel costs.

The yearly pre-tax loss for the airline stood at 19.2m pounds in June; largely because of harsh cold weather, key IT repairs and extra costs of maintenance. The overall loss is expected to be in the region of 12m pounds because of 10m pounds bonanza accrued due to end of a burdensome lease. Announcement of interim results is predicted to be on November 14, 2018.

Flybe’s Chief Executive, Christine Ourmieres-Widener disclosed a favorable market situation for the summer months leading to a 6.8% increase in per seat passenger revenue. She further revealed plans for optimum utilization of capacity and stated that the cost cutting measures were yielding results. However, they were not going to rest on these achievements in view of the fuel cost and currency storm and would continue with their measures.

Peter Morris, an aviation economist with Flight Global stated that the business model used by Flybe for its operations was a drawback of sorts. It lay between low cost airlines like Ryanair and big carriers such as British Airways but if things proved successful then it benefitted Flybe both ways. However, Flybe had to cross the first hurdle of the cold winters which always saw very low demands.

Flybe’s customers included passengers traveling from secondary cities of UK to varied European destinations and other airlines using it on a contract basis. With a weak pound and needing to pay lease and fuel costs in dollars it was not a wonder that the airline was incurring losses. The state of the UK economy was definitely having an impact on the performance of the airline, according to Morris.