Financial results for the year ended 31 March 2010 and update on current trading
Europe’s largest regional airline delivers resilient results. One of only three major European airlines to report profits throughout the global recession, Flybe maintains progress through key summer months as it implements its expansion plans in Continental Western Europe.
Flybe, Europe’s largest regional airline and the UK’s largest domestic airline, is filing accounts for the financial year ended 31 March 2010.
Key financial highlights
· Turnover maintained at £570.5 million (2008/09 £572.4 million).
· One of only three European major airlines to report profits throughout the global recession, with profit before tax* of £6.8 million (2008/09: £12.8 million). Profit before tax, after exceptional, integration and restructuring items, of £5.7 million (2008/09 £0.1 million).
· EBITDAR** up 4.7% to £93.8 million (2008/09: £89.6 million) and EBITDAR margin increased to 16.4% (2008/09: 15.7%).
· Ancillary revenues per passenger increased by 15.9% to £11.98 per passenger (2008/09 £10.34).
· Operating cash inflow before restructuring of £50.9 million generated in the year (2008/09: £31.4 million).
· Net debt more than halved to £21.0 million (2008/09: £49.8 million).
* Excludes net exceptional, integration and restructuring charges of £1.1 million (2008/09 £12.7 million)
** Earnings before tax, depreciation, amortisation and aircraft operating lease rentals (excluding net exceptional, integration and restructuring charges)
Key operating highlights
· Flybe is one of only three major European airlines to report profits throughout the recession.
· Achieved leadership in its core target sector, the UK domestic market.
· Passenger numbers maintained at 7.2 million passengers (2008/09 7.3 million), despite the continued effects of the recession.
· Became market leader in domestic services at London Gatwick.
· Continued rationalisation of the fleet, resulting in Flybe’s two aircraft type strategy being completed in May 2009, with an average fleet age of less than 4 years and an increase in average seats per aircraft of 15.1% since 2007/08.
· The Group gained considerable experience of operating in Continental Western Europe through the conclusion of a deal in August 2009 with Olympic Air in Greece to ‘start up’ the regional operations of the new Olympic Airline, removing all of Flybe’s surplus aircraft and crew costs for 2009/10.
Jim French, Chairman and Chief Executive, commented:
“I am delighted with the results we achieved for the year to 31 March 2010. Against a backdrop of the continued impact of the recession and the effects of extreme volatility in fuel prices, Flybe grew its market share to become Europe’s largest regional airline and the UK’s largest domestic airline whilst also being one of only three major European airlines that have reported profits throughout the recession.
“Flybe has a great cost-effective product which is underpinned by consistent delivery of industry leading punctuality. This success is based on fantastic staff, both in the air and on the ground, and a strong and stable management team, who together have implemented a focused strategy with great agility.”
Update on current trading
Trading for the first five months of the current financial year, period ending 31st August 2010, has been strong, with revenue and profit before tax ahead of the same period last year, before the impact of the Icelandic volcanic ash cloud. The volcanic ash disruptions, which caused the unprecedented closure of much of Northern Europe’s airspace during the latter half of April and early May, affected Flybe’s network for 9 days and cost the company an estimated £12.0m or c2.1% of 2009/10’s annual revenue, broadly in line with its peer group. Flybe led an industry initiative which means that only 5% of the flights that were cancelled during the volcanic ash disruption period of April/May 2010 would now be lost under the revised regulations, if the ash issue were to re-emerge.
During the period ending 31 August 2010, the company has seen solid progress in both ticket and ancillary yield. Flybe continued to deliver strong operational performances with Forbes naming Flybe as one of the ten most punctual airlines in the world, and the only UK or Irish airline to feature in the list. Flybe continues to be the most punctual major airline at London Gatwick having been number one for punctuality over the last two years (CAA stats July 2008-June 2010).
Flybe is Europe’s largest regional airline and has continued to roll out its European growth strategy, announcing several landmark deals in July and August. These developments will help to consolidate the Group’s position as a major European carrier and provide a solid platform for growth within Continental Western Europe:
· Extensive codeshare agreement with Air France, signed in July 2010, gives Air France passengers access to 45 France to UK routes and 17 UK domestic connections. Flybe passengers gain access to five additional routes between the UK and France as well as seven new domestic French routes and 11 international routes.
· Ongoing discussions with Finnair, for Flybe to co-operate in the provision of regional services in Scandinavian and the Baltic Sea areas.
· Along with its existing relationships with British Airways, Flybe is now in a position to take advantage of key strategic alliances with some of Europe’s largest legacy carriers, underpinned by the announcement of a substantial order to purchase up to 140 Embraer E-Series aircraft in July 2010. This enhanced capacity will support the Group’s long-term growth and will support its expansion plans over the next two to three years.
Looking ahead, Mr. French added:
‘‘While the global economic outlook remains unclear, we remain optimistic that Flybe will continue to make strong progress during 2010/11, especially as a result of our recent deals with Air France and Embraer.
We have a proven business model and strategy, and supportive owners. We have continued to grow our market share in the UK and have announced a string of exciting business developments which will accelerate the roll-out of the Flybe proposition into continental Europe, and we possess the flexibility within our fleet to accomplish this expansion. Our brand, which is already well established in the UK, is increasingly well known in Continental Europe and we continue to achieve operational efficiencies that significantly differentiate Flybe from other airlines.”