Codeshare ‘milestone’ gives Flybe a lift

Flybe's key load factor measure hit an all-time high as passenger numbers held steady and capacity was reduced. Picture: Ian Jacobs

The new codeshare deal will connect Flybe passengers from Aberdeen and Edinburgh to Emirates flights out of Glasgow to Dubai. Travellers from other Flybe bases throughout the UK will similarly be able to connect with Emirates at Birmingham, Manchester, London Gatwick and Newcastle airports.

Paul Simmons, Flybe’s chief commercial officer, described the agreement as “yet another important milestone” in the company’s development. It comes on top of existing codeshare partnerships with Aer Lingus, Air France, British Airways, Cathay Pacific, Etihad, Finnair and KLM.

The Exeter-based carrier has completed the first of a three-year plan to rebound from a fall in passenger numbers in the aftermath of the financial crisis. The company has cut jobs, grounded surplus fleet and surrendered airport slots in a bid to shed unprofitable routes.

However, the cost of maintaining those unwanted planes hit Flybe in its latest financial year, pushing it back into the red after a previous profit of £8.1 million.

The airline said it paid £26m last year to store 14 Embraer E195 jets that it wants to get rid of. It has since found “solutions” for seven of the planes, and continues to seek buyers for the remaining aircraft.

Adverse currency movements added to the bottom-line woes in what chief executive Saad Hammad described as “a more challenging environment than anticipated”. The result was a pre-tax loss of £35.6m.

On a brighter note, the company maintained passenger numbers at 7.7 million, which together with capacity reductions lifted the key load factor measure to an annual all-time high of 75.2 per cent. In addition, revenue per seat was up 3.3 per cent to £51.35.

The news sent Flybe shares higher in yesterday’s trading, closing up 3.6 per cent at 58p. The stock took a major hit in January after the company issued a profit warning.

Robin Byde, transport analyst at Cantor Fitzgerald, praised the latest improvements in load factors and revenues.

“This demonstrates to us that the business is starting to focus on profitable areas of growth,” he added.

During the year, Flybe re-established its base at Aberdeen, which it had previously closed down in the early part of 2014. It also launched new services between London City and Scottish airports in Aberdeen, Edinburgh and Inverness.

The company took a £10.7m hit writing down the cost of its loss-making joint venture with Finnair, which it sold to its partner in November for just one euro. Total losses from all discontinued operations during the year amounted to £12m.

Summer trading was on track during the first few weeks of the new financial year, although revenue per passenger seat was 1.7 per cent down on the same period a year earlier. This, however, was distorted by the timing of Easter.