Flybe Swings To First Half Profit

British airline Flybe swung to a profit in the first-half, after it grew its UK regional business, cut costs under a turnaround plan and benefitted from a lower fuel price.

The company reported pretax profit of GBP£22.9 million pounds (USD$34.70 million) in the six months ended September 30, compared with a GBP£3.3 million loss in the same period last year, after it added new capacity and cut costs on surplus aircraft and marketing.

In its first-half, the airline also benefited from an improved pricing system and more digital marketing, plus the lower cost of oil, although up to 90 percent of Flybe's fuel needs are hedged. It expects to receive a real boost in its next financial year when those hedges expire.

Flybe, whose routes connect UK regional cities to each other as well as European destinations, has over the last two years cut staff numbers and wages, sold airport slots and exited unprofitable routes, as part of a plan aiming for sustainable annual profit growth.

"In terms of our outlook going forward, we're optimistic, but cautiously so in the next half," chief executive Saad Hammad said.

European airlines tend to make the bulk of their profits in the summer months, while the winter half-year period is often loss-making.

The lower fuel price is creating a more competitive environment for all airlines and Europe's biggest low-cost airline Ryanair has warned of a fare war.

Given its regional routes, Flybe's competitor on two thirds of its routes was road and rail, rather than airlines, said Hammad, adding that the airline was mindful of the competitive environment and planned to grow capacity 13 percent in the second-half.

"We're focusing it very much on frequency enhancements to our existing routes rather than launching new routes," Hammad said.