(Adds CEO comment, analyst comment, share price)
LONDON, Nov 11 (Reuters) - British regional airline FlybeGroup was upbeat ahead of the traditionally slackerwinter travel period after its turnaround plan returned it toprofit in the first half.
Flybe, whose routes connect UK regional cities to each otheras well as European destinations, has over the last two yearscut staff numbers and wages, sold airport slots and exitedunprofitable routes, as part of a plan aiming for sustainableannual profit growth.
"In terms of our outlook going forward, we're optimistic,but cautiously so in the next half," chief executive Saad Hammadsaid in a telephone interview on Wednesday.
European airlines tend to make the bulk of their profits inthe summer months when more people take flights to go onholiday, while the winter half-year period is often loss-making.
For the six months ended Sept. 30, Flybe reported pretaxprofit of 22.9 million pounds ($34.70 million) compared to a 3.3million pound loss in the same period last year, after it addednew capacity and cut costs on surplus aircrafts and marketing.
Analysts at Cantor Fitzgerald, who have a "hold" rating onthe stock, said they believed Flybe remained in transition andstuck to their forecast for full-year adjusted pretax profit of5.2 million pounds.
Shares in the airline, which have gained about 60 percent inthe last six months, were down 0.5 percent to 89 pence at 1118GMT, paring earlier gains of as much as 5 percent.
In its first-half, the airline also benefited from animproved pricing system and more digital marketing, plus thelower cost of oil, although up to 90 percent of Flybe's fuelneeds are hedged. It expects to receive a real boost in its nextfinancial year when those hedges expire.
The lower fuel price - the price of crude has more thanhalved since June last year - is creating a more competitiveenvironment for all airlines and Europe's biggest low-costairline Ryanair has warned of a fare war.
Given its regional routes, Flybe's competitor on two thirdsof its routes was road and rail, rather than airlines, saidHammad, adding that the airline was mindful of the competitiveenvironment and planned to grow capacity 13 percent in thesecond-half.
"We're focusing it very much on frequency enhancements toour existing routes rather than launching new routes," Hammadsaid.
($1 = 0.6600 pounds) (Reporting by Sarah Young; editing by Costas Pitas and ElaineHardcastle)
