Flybe Hit By Booking Uncertainty And Currency Costs

British regional airline Flybe reported a drop in the level of bookings for coming months and warned over the impact of the strength of the US dollar.

Flybe, which is coming to the end of a turnaround plan which started in 2013, said it was on track for a pretax profit of GBP£3 million for the 12 months ended March 31 2016, against a GBP£25 million adjusted loss last year.

Cantor analyst Robin Byde said "I think they've done very well on restructuring capacity and fleet but demand still just seems to be too weak on the routes that they fly.".

"You've had a number of investors decide that trading is not going to get significantly better any time soon and it's time to sell," Byde added.

Flybe, which says that about half its customers are flying for business, said that for the six months ended September 30 2016, 21 percent of its capacity had already been sold, 3 percentage points behind the previous year.

Flybe, which pays for fuel in US dollars, said the strengthening dollar would cost it GBP£7 million in its 2016/17 financial year, despite it hedging exposure to fuel and the dollar at a higher level.

Flybe said its turnaround plan had made progress, and the last six months showed its business model was working. It maintained forecasts despite a drop-off in demand for business travel in the wake of the Paris attacks last November, and an increase in capacity in European flying.

"Despite a really difficult revenue environment… we're really pleased that Flybe's able to demonstrate its resilience," chief executive Saad Hammad said in an interview.

Over the last six months, Flybe has slowed planned capacity expansion and accelerated a cost-cutting plan to, for example, renegotiate maintenance contracts, to help it maintain profitability.