Flybe Group Regulatory News (FLYB)

7 April 2016

Flybe Group plc

("Flybe" or "the Group")

Flybe maintains transformation momentum

Flybe, Europe's largest regional airline, announces the following trading update for its fourth quarter ending 31 March 2016 ahead of publication of its 2015/16 results on 9 June 2016. Results for the full year to March 2016 are anticipated to be in line with market expectations.

A quarter of solid momentum: 

· Stable yields1 against a 2.4% increase in seat capacity2 versus prior year

· Load factor3 of 68%, a reduction of 2 ppts versus prior year

· Passenger4 volumes maintained at 1.8m (Q4-2015: 1.8m)

· Passenger revenue5 in line with prior year

During the fourth quarter and as previously announced, seat capacity was increased at a temporarily lower rate of 2.4% in response to the events in Paris in November. This agile response ensured Flybe mitigated lower load factors with stable yields and delivered passenger volumes and revenue in line with the fourth quarter of last year.

In March 2016, Flybe took ownership of three Q400 aircraft, previously on operating leases, for a cash consideration of USD34m. This is in line with Flybe's strategy of rebalancing its aircraft fleet away from reliance on operating leases and towards outright ownership which brings the associated margin uplift. Flybe's cash position remains strong with total cash of £171.3m at 31 March 2016.

Summer UK trading to-date (H1 2016/17 forward trading position as at 3 April 2016)

Summer trading is on track with the additional capacity selling through as planned.

· c17% increase in capacity versus prior year (half of which relates to E195 capacity deployed in airport partnership deals and the remainder on routes with additional frequency requirements or on new low volume, short-hop regional routes)

· c21% of capacity already sold, 3ppts behind prior year (reflecting investment in added frequencies on 34 existing routes and the launch of 39 new routes including those in E195 associated airport agreements)

In view of ongoing macro-economic uncertainty, Flybe has now hedged both fuel oil and US dollar to 90% of 2016/17's exposure. The rise in the value of the dollar since the turn of the year has impacted 2016/17's operating costs by £7m.

Saad Hammad, Chief Executive, said: "This last year has seen enormous progress at Flybe. We completed the resolution of the key legacy issues while significantly improving our service and customer offering. We are carrying more passengers across a growing route network and doing so at a lower unit cost.

Against the background of the highest level of market capacity growth for six years driven by low fuel prices, we continue to be disciplined in deploying our capacity, focusing investment on routes where airport partners provide cost mitigation and those which adhere strictly to our business model. We are also continuing to reduce unit cost, which provides margin resilience, as well as reviewing our capacity growth rate beyond this summer.

Our booking profile for the summer reflects our capacity investments and our growing appeal to business travellers who typically book as close as possible to their day of travel.

We look forward to making further progress over the coming year as we enter the next chapter of our journey which is focused on disciplined and profitable growth."

Enquiries:

Flybe UK KPIs

Hedging

Flybe UK's current hedge books6 @ 5 April 2016 are summarised below (all hedges are forward swaps).

Jet fuel (c $120m annual expenditure)

· H1 2016/17 - 92% hedged at $590 per tonne

· H2 2016/17 - 89% hedged at $539 per tonne

· H1 2017/18 - 67% hedged at $473 per tonne

US Dollar (c. $315m annual spend)

· H1 2016/17 - 92% hedged at $1.51

· H2 2016/17 - 88% hedged at $1.50

· H1 2017/18 - 46% hedged at $1.45

Flybe UK currently has a broadly neutral position in Euro income and expenditure.

END

Notes:

1. Passenger yield is passenger revenue per sold passenger

2. Seat capacity is the number of seats on an aircraft available for passenger occupancy

3. Load Factor is scheduled seats sold divided by scheduled available seats

4. Passengers are any person who has a ticket to fly on the aircraft

5. Passenger revenue is the sum of ticket revenue and ancillary revenue less refunds on scheduled services

6. Based on anticipated fuel, USD requirements

Forward-looking statements:

Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and Flybe Group plc ("the Group") plans and objectives for future operations, including, without limitation, discussions of the Group's Business Plan, expected future revenues, financing plans and expected expenditures. All forward-looking statements in this report are based upon information known to the Group on the date of this IMS. The Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

It is not reasonably possible to itemise all of the many factors and specific events that could cause the Group's forward-looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of the business. Further information on the primary risks of the business and the risk management process of the Group is given in the Annual Report and Accounts 2014/15; these documents are available on http://www.flybe.com/corporate/investors.