Financial Trading Blog

Stock of the day 02/06/2016 – Flybe Group PLC



Can Flybe, the largest independent regional airline in Europe, end its nose-dive when it reveals it full year figures next Thursday?


It has been a genuinely terrible 2016 for Flybe, with basically no real respite from its fall. And though the company may take some solace in the fact that it saw an even worse decline in the first 6 months of 2015 before turning things around in the back end, its current trading pattern has pushed it below the nadir it struck in its darkest days of last year.

Immediately as 2016 began the stock started to slide, falling below 85p as January wore on. Things only worsened as the month came to a close, Flybe’s third quarter update sparking a 10% plunge to a 6 month low of 74p. That update saw the airline, like the rest of the travel sector, struggle with the aftermath of November’s tragic attacks in Paris, with load factor (i.e. how full its planes are) falling to 68.9% from 74.3% year-on-year, in the process dragging revenue per seat over 7% lower to £46.61.

Flybe Group PLC Chart June 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 02/06/2016)

After its sharp post-trading statement decline Flybe fell into a steadier slide, trickling to 70p by the start of March before another wince-worthy downward movement left it at 65p by the beginning of April. Flybe’s pain didn’t end there, with its fourth quarter update wiping another 10% off in value as the company revealed a further fall in load factor (down 2% year-on-year to 68%) and a £7 million increase in operating costs thanks to a stronger dollar.

Since then the stock has continued its gradual descent, at one point touching 50p for the first time in nearly 3 years. Flybe Group PLC sits at a current trading price of 52.5p (IT-Finance.com. 02/06/2016).

In terms of the company’s full year figures next week the key metric will be summer sales, which Flybe has tried to bolster with additional capacity. However, April saw only 21% of that capacity sold, 3 percentage points lower than last year, meaning Flybe may be in for another tough update on Wednesday.

Flybe Group PLC has a consensus rating of ‘Buy’ with an average target price of £1.16.


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