Flybe blames overcapacity for year-end loss
Flybe has outlined plans to cut capacity to help curb losses of just under £20 million for the year to March 31.
The airline admitted its expansion had not been matched by a growth in demand, leading to a pre-tax loss of £19.9m compared to a profit of £2.7 million in the previous financial year.
"Despite the substantial progress in reducing the size of legacy fleet orders in 2015/16, Flybe has still seen significant capacity growth in a market where we witnessed slower growth in consumer demand," it said.
"The company has deployed its additional capacity on new routes and increased frequencies on existing routes, solely where these deployments could deliver at least a contribution to direct costs.
"New routes and increased frequencies were targeted to cover marginal costs in the early years of operation, but do not contribute significantly to overall profitability. The capacity growth therefore had a negative effect on profitability."
Flybe said its fleet size was at its peak and would be reduced during 2017/18 to build the ‘platform to shape a sustainable future’.
"This will enable Flybe to become a more customer centric business and for the first time concentrate the business on profitable routes," it said.
"Becoming a truly demand and customer-focused business is the key plank of our strategy."
The airline, under its new CEO Christine Ourmieres-Widener, said passenger numbers during the last financial year rose by 7.6% to 8.8 million, which reflected the immaturity of new routes and resulted in lower load factor, down 3ppts to 69.6%.
The cost per sat rose by 2% to £53.74, with revenue up by 13.4% to £707.4 million.
The airline said this year it would also embark on a three-year project to digitalise and ‘build further resilience’ into its IT platform.
"A principal reason for customer dissatisfaction is the quality of our website and their interaction with it," it said.
"Over 80% of our customers are booking online via our website, with the majority being repeat customers. Our new digital platform, backed by our sales and marketing action plan, will enable us to attract new customers and enhance our customer relationship management."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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