FLYBE | Trading Update | RNS
10 January 2012
Flybe Group plc
("Flybe" or "the Group")
Flybe, Europe's largest regional airline, provides the following update on trading for the quarter ended 31 December 2011 ('Q3 2011/12').
Revenue under management from the Group's activities grew c20% in Q3 2011/12, driven by Flybe's entry into Continental Europe through the Flybe Nordic joint venture which is performing in line with expectations.
However, conditions in the UK domestic air travel market (which represents c.70% of Flybe UK's activities) have continued to deteriorate, from an underlying YOY decline of 6% in H1 2011/12 to c8% in Q3 2011/12, with sales in December being particularly disappointing.
In these difficult market conditions, Flybe UK has maintained its yields at last year's levels (as opposed to achieving the previously planned yield increases), thereby maintaining volumes and growing market share. The Flybe brand has grown its share of the UK domestic market by 2ppts, retaining its market leading position.
Flybe UK's passenger numbers and revenues for Q3 2011/12 were broadly in line with Q3 2010/11, despite the continued decline in the UK domestic market. However, this does represent a significant shortfall against our revenue expectations for Q3 2011/12.
It is not expected that the Q3 2011/12 shortfall in revenue will be recovered during the remainder of the 2011/12 financial year. Based on latest sales trends, we believe that challenging market conditions will continue for the rest of the financial year to 31 March 2012.
Flybe continues to manage capacity and reduce costs aggressively.
Management believes current market conditions will force further rationalisation of the European regional and short haul airline market, from which Flybe is well positioned to benefit.
Flybe will provide a further update in its Q3 Interim Management Statement on 10 February 2012.
Jim French, Chairman and Chief Executive Officer, commented:
"The UK domestic market is clearly challenging. Under such circumstances, notwithstanding the shortfall against our revenue expectations, I believe that maintaining volumes and growing market share at the expense of planned yield increases was the correct decision to protect the long term potential of Flybe. We have disposed of surplus aircraft this year and reduced our winter capacity in line with the market, and we continue to aggressively manage capacity and costs.
"We identified some time ago the need to lessen our dependence on the UK market and our move into Europe last year is progressing well.
"With a strong balance sheet, UK market leadership, a number of other opportunities under discussion and $500m of aircraft financing secured (covering all planned deliveries to July 2014), we believe that our overall strategy is intact and that Flybe has a strong future in the medium and long term."
Tel: +44 20 7457 2020
Jim French, Chairman & Chief Executive Officer
Andrew Knuckey, Chief Financial Officer
Tel: +44 20 7457 2020
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