Flybe cuts capacity and costs amid weak demand, pricing pressure

Flybe Group Plc said it has reduced capacity and cut costs as weak demand, pricing pressures and rising competition from rail operators dented Q4 revenue. The airline, which connects British regional airports to London and other European cities, said on Wednesday it expects to report an adjusted loss before tax for the year through March 2017 due to a charge of 5m-10m pounds for a systems upgrade. Flybe's shares dropped 6.4% in morning trade following its results statement. Brokerage Liberum had a prior pre-tax profit forecast of GBP4.2m pounds for the year. It now estimates a loss of GBP3.8m. The airline said that summer trading this year is in line with its expectations. It forecast an 11% increase in revenue in the first half of 2017-2018 and a 6% rise in yield, helped by the timing of the Easter holiday, which is later than last year. In the quarter through March 2017 it estimated passenger revenue rose by 9.8%, compared with 13.5% in the previous quarter. "The period has been characterised by weak demand in an uncertain consumer environment, together with price competition arising from overcapacity amongst airlines and sharpened price activity from rail operators," Flybe said. European airlines have driven down fares by adding more seats to boost their market share in a period of low oil prices. <br/>