Flybe has reported a sharp drop in profits due to IT and aircraft maintenance cost issues.
The group saw adjusted pre-tax profits for the six months to September 30 fall year on year from £15.9 million to £8.4 million due to an “onerous” IT contract and rising maintenance costs. Non-adjusted pre-tax profits rose from £7 million to £15.1 million due, the airline said, to revaluation gains of £6.7 million on dollar-based aircraft loans.
Flybe chief executive Christine Ourmieres-Widener said reductions in the airline’s fleet size meant load factors would rise and yields “would stabilize”. The carrier saw a four percentage point increase in load factors to 76% during the period. Average revenue per seat increased 8.8% to £55.29.
She added: “While half-year profits are lower than last year, due to the one-off IT contract costs, higher maintenance expenses and the impact of the fall in the value of sterling, I am confident that we are on a clear path to sustainable profitability through the investments and improvements we are making at Flybe.
“In the second half, we will focus on improving our cost base and reliability performance while preparing the business for the future as we invest in the new digital platform. As the business model changes, I am particularly pleased to have a new senior management team with ever more aviation experience.”
Flybe said the outlook remained “challenging”, with over-capacity in the short-haul European sector, but that fleet reductions would help its bottom line. A new deal with Amadeus is set to increase revenue, while fleet numbers peaked in May at 85 aircraft. Flybe said it planned to reduce the fleet to 70 by 2019/20.