Flybe Group PLC Q1 2017/18 Trading Statement (0823M)

TIDMFLYB

RNS Number : 0823M

Flybe Group PLC

26 July 2017

Flybe Group plc

 
 ('Flybe' or 'the Group')   26(th) July 
                             2017 
 

Q1 2017/18 TRADING STATEMENT

11.7% passenger revenue growth as load factor and passenger yield improve

With greater control over fleet capacity, the concentration on profitable routes is beginning to show through in Flybe's performance. In Q1, passenger revenue grew by 11.7% with seat capacity growth slowing to 3.5%. Both load factor and passenger yield improved, bringing an increase in revenue per seat. Q1 revenue benefited from a few additional routes including Heathrow, as well as the timing of Easter.

The quarterly passenger revenue performance is outlined below:

   --      11.7% growth in passenger revenue to GBP174.0m (2016/17: GBP155.8m) 
   --      3.5% growth in seat capacity to 3.4 million (2016/17: 3.2 million) 
   --      7.1% increase in passengers to 2.4 million (2016/17: 2.3 million) 
   --      2.5 ppts improvement in load factor to 72.5% (2016/17: 70.0%) 
   --      4.3% improvement in passenger yield to GBP71.33 (2016/17: GBP68.39) 
   --      7.9% increase in passenger revenue per seat to GBP51.73 (2016/17: GBP47.95) 

As planned, the last two leased Q400 aircraft were delivered in the quarter with the total fleet peaking at 85 in May (including the five ATR aircraft supporting the SAS White Label operation). As part of the planned fleet reduction, the first of this year's six end-of-lease Q400 handbacks is in the process of being returned to the lessor. The commercial agreement with Stobart Air to operate two E195 jets from London Southend commenced in May with one aircraft in operation and the second due to start in August.

Improving operational excellence is a key pillar of the Sustainable Business Improvement Plan outlined in June to drive both customer satisfaction and cost efficiency. In Q1, performance has been positive with a halving of cancellations year on year. On time performance, measured as arrivals within 15 minutes of schedule, fell slightly from 82.4% to 81.0% and will now be our focus for the near future.

We expect to finalise contract negotiations for the new digital platform in the coming month. As advised at the year-end results in June, we anticipate a provision for IT costs of around GBP6m in the first half of 2017/18 relating to cancellation penalties on existing IT contracts. Once introduced, the new platform will improve booking experience, attract new customers and enhance our customer relationship management.

Q2 2017/18 current trading

Forward sales in Q2 as at 24(th) July 2017 improved as the slowdown in capacity growth continued to drive yield and revenue per seat:

   --      14% increase in passenger revenue vs. prior year 
   --      2% increase in seat capacity vs. prior year 
   --      4% increase in yield vs. prior year 
   --      52% of seats sold vs. 48% in the prior year 
   --      12% increase in revenue per seat vs. prior year 

Capacity growth as a whole for H1 is likely to be around 2%, but we are now planning for H2 capacity to reduce by around 7%, reflecting a smaller fleet and winter scheduling plans.

Christine Ourmieres-Widener, Chief Executive Officer, said:

"I am very encouraged by my first six months as CEO at Flybe. Both load factor and passenger yield have improved as expected, and with the greater control we have over capacity we will focus on rebuilding unit revenues. Alongside this, we are investing in the future, as demonstrated by our new Heathrow flights, our commitment to improve operational performance and deliver an enhanced customer digital platform. I am very excited about developments in Scotland, with our new routes complemented by the recently announced partnership with Eastern Airways, which gives increased connectivity options for passengers, and shows our long-term commitment to Scotland.

There remains a lot to be done, but we have the firm foundations needed to progress our plans for the business. In the second half of 2017/18, given the planned capacity reductions, there will be an increased focus on efficiency to improve operational performance and manage unit costs."

 
 
 
   Enquiries: 
 
   Flybe 
   Philip de Klerk, Chief     Tel: [phone] 
   Financial Officer          5151 
 
   Maitland 
   Andy Donald                Tel: [phone] 
                              5151 
 

Flybe UK revenue KPIs

 
                                  Quarter   Quarter     Change 
                                       to        to          % 
                                   30 Jun    31 Jun 
                                     2017      2016 
-------------------------------  --------  --------  --------- 
 Seats and passengers 
 Scheduled seats(1) (million)         3.4       3.2        3.5 
 Passengers(2) (million)              2.4       2.3        7.1 
 Load factor(3) (%)                  72.5      70.0   2.5 ppts 
-------------------------------  --------  --------  --------- 
 
 Revenue 
 Passenger revenue(4) 
  (GBPm)                            174.0     155.8       11.7 
 White Label flying revenue 
  (GBPm)                              8.9       7.8       14.1 
 Revenue from other activities 
  (GBPm)                              4.7       2.9       62.1 
-------------------------------  --------  --------  --------- 
 Total Flybe UK revenue 
  (GBPm)                            187.6     166.5       12.7 
-------------------------------  --------  --------  --------- 
 
 Yield 
 Passenger yield(5) (GBP)           71.33     68.39        4.3 
-------------------------------  --------  --------  --------- 
 
 Passenger revenue per 
  seat(6) (GBP)                     51.73     47.95        7.9 
-------------------------------  --------  --------  --------- 
 
 

Cost per seat(7) increased by 4.3% but in constant currency improved by 0.7%. Excluding fuel, cost per seat increased 5.0% and in constant currency increased by 1.1%.

Hedging

Flybe UK's current hedge books at 24(th) July 2017 are summarised below

Jet fuel

   --              Q2 2017/18 - 94% hedged at USD 490 per tonne 
   --              H2 2017/18 - 88% hedged at USD 497 per tonne 
   --              H1 2018/19 - 73% hedged at USD 517 per tonne 

US Dollar

   --              Q2 2017/18 - 94% hedged at USD 1.406 
   --              H2 2017/18 - 93% hedged at USD 1.412 
   --              H1 2018/19 - 35% hedged at USD 1.291 

Carbon

   --              Calendar year 2017 - 100% hedged at EUR2.59 per tonne 
   --              Calendar year 2018 - 0% hedged 

Flybe UK's exposure to Euros has been steady but remains under review for hedging.

END

Notes:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR") EU no.596/2014. Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Forward-looking statements:

Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and Flybe Group plc ("the Group") plans and objectives for future operations, including, without limitation, discussions of the Group's business plan, expected future revenues, financing plans and expected expenditures. All forward-looking statements in this report are based upon information known to the Group on the date of this Trading Statement. The Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

It is not reasonably possible to itemise all of the many factors and specific events that could cause the Group's forward-looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of the business. Further information on the primary risks of the business and the risk management process of the Group is given in the Annual Report and Accounts 2016/17. This document is available from http://www.flybe.com/corporate/investors.

1 Seat capacity represents the average number of seats per aircraft multiplied by the number of scheduled sectors flown.

2 Passengers are customers with an issued ticket where the ticket has charged a fare and/or a passenger surcharge and tax (if applicable).

3 Load factor is sold seats (Flybe ticketed passengers on either Flybe operated scheduled services or hard block routes operated by the codeshare partner) divided by scheduled available seats (seats available for passenger occupancy on scheduled services).

4 Passenger revenue represents total ticket and ancillary revenue (including unflown APD) less refunds plus revenue from hard block codeshare arrangements.

5 Passenger yield represents total passenger revenue (as defined in note 4) per passenger after the deduction of government taxes and levies.

6 Passenger revenue per seat is passenger revenue generated divided by scheduled available seats flown.

7 Cost per seat includes all costs related to White Label operations (aircraft ownership cost, crew, maintenance, insurance and overheads), but not the flown seats associated with White Label operations.

This information is provided by RNS

The company news service from the London Stock Exchange

END

TSTSEMFAIFWSEIW

(END) Dow Jones Newswires

July 26, 2017 02:00 ET (06:00 GMT)