Investor jitters over the shock resignation of Flybe (FLYB) CEO Saad Hammad last month have receded as the European regional airline posts reassuringly positive half year results.
News of a 12.8% rise in revenue is going some way towards calming leadership concerns that triggered a 13% share price drop on the day that Hammad walked away on 26 October. That surprise announcement followed a warning in July so today's 5.7% share price rise, to 37p is encouraging.
THE DETAILS
Revenue is up from £339.6m in the first half of 2015 to £383m in the six months to 30 September, driven by higher UK passenger volumes, further development of White Label operations and higher revenue in its Aviation Services.
Flybe’s cost per seat has been reduced by 5.8% due to lower oil prices, although pre-tax profit slumped from £22.9m to £7m over the same period as a result of the weaker pound.
Broker Cantor Fitzgerald analyst Robin Byde recommends ‘hold’ noting that passenger volumes are healthy at 7.1%, although this was outstripped by increased capacity through more seats.
He highlights that Flybe is facing a challenging environment as excess seat capacity in the European short-haul market, a weaker pound and business sentiment are impacting all carriers.
Load factor in Flybe UK has declined by 4.3pts to 72%, suggesting that the airline was less effective at filling its flights in the first half.
As of 30 September, the company has net assets of £167.1m and net debt of £24.8m.
