Flybe reveals immediate impact of Brexit
Flybe today warned that the result of the EU referendum will knock £2.5 million off its annual profit.
It said that the rise in the cost of the US dollar since the UK voted to leave the European Union, consumer uncertainty and repeated terror attacks could have a ‘materially adverse’ impact on the airline.
Even though the airline has hedged 90% of its dollar and fuel requirements for this financial year, it said the impact of the stronger dollar since the EU referendum will have a negative impact of £2.5 million on full year profit if rates remain at current levels, all things being equal.
In a trading update, CEO Saad Hanmad said: "Flybe continues to make progress despite significant external challenges. We delivered a solid quarter through vigorous commercial execution and enhanced operational delivery.
"The current outlook is very uncertain and we have limited forward visibility due to our late booking profile. We are yet to see the full impact on demand of the devaluation of sterling and the heightened consumer uncertainty after the Brexit vote.
"It is also too early to assess the potential demand impact of recent terrorist attacks.
"We are continuing to take action to reduce unit costs and moderate our seat capacity growth, as demonstrated by our recent deal with NAC to cancel a contractual obligation to lease an incremental nine aircraft.
"While we currently face significant external risks, we have a strong balance sheet and cash position as well as a disciplined and resilient organisation to take us forward."
Flybe’s passengers and revenue were up 9% in the first quarter of its financial year, but its capacity for the three months to the end of June rose 16% so the load factor fell from 74% to 70% and the average revenue per seat dropped from £52.73 to £47.95.
The airline has agreed to annual pay rises of around 2% to pilots, cabin crew and engineers over the next three years.
It said that, despite Brexit, its mission is unlikely to be affected in the long term.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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