JANUARY 28TH, 2016

Q3 2015/16 Trading Statement: Flybe's Return To Growth Continues

Flybe today provides its trading update for the three month period from 1 October 2015 to 31 December 2015.

The return to growth delivered in H1 has continued in Q3 despite the impact of a reduction in travel following the events in Paris in November and pressure on yields from industry wide capacity growth acceleration and lower fuel costs. Flybe focused on yield protection and accelerated some of its cost saving initiatives, while also reducing its fourth quarter capacity growth rate by c10ppts.

The return to growth has continued in Q3
· 10.1% increase in seat capacity1 to 2.8m seats (Q3 2014/15: 2.5m seats)
· 2.1% increase in passenger volumes2 to 1.92m (Q3 2014/15: 1.88m passengers)
· 3.6% growth in passenger revenue3 to £128.9m (Q3 2014/15: £124.4m)

Encouraging unit revenue development as yield prioritised over load factor
· 1.2% improvement in passenger yield4 to £67.66 (Q3 2014/15: £66.84)
· 5.4ppts reduction in load factor5 to 68.9% (Q3 2014/15: 74.3%)
· 6.1% reduction in passenger revenue per seat6 to £46.61 (Q3 2014/15: £49.65)

Cost reductions at constant currency sustained in Q3
· 2.2% reduction in cost per seat (UK, excluding fuel)
· 4.7% reduction in cost per seat (UK, including fuel)

Q4 2015/16 forward bookings (as at 24 January 2016) reflect Flybe’s increased schedule focus on business travellers with their late booking profile
o 3.2% increase in seat capacity vs. prior year
o c37% of seats sold vs. c40% in the prior year
o 2.0% increase in yield vs. prior year
o 6.2% decrease in passenger revenue per seat vs. prior year

Flybe’s focus on business travellers is being increasingly recognised
· In January, Flybe was named Best Short Haul Airline at the 2016 Business Travel Awards, beating amongst others easyJet and British Airways.

Saad Hammad, Chief Executive Officer, said:

“The tragic events in Paris overshadowed this last quarter and caused a significant hiatus in airline bookings, not just to France, but also on UK domestic and near-continent travel. As we expected, the combination of higher capacity in the market and lower spot fuel prices have led to lower yields sector-wide, even as the benefits start to come through from the unwinding of fuel price hedging. In this uncertain environment, we decided to protect yields rather than to chase unprofitable marginal revenue.

“As a result, revenue has grown by 3.6%, and this, together with continued reductions in unit costs, reinforces our resilience as a business, now that all legacy issues have been resolved. Passenger demand is now slowly recovering and reflecting a later booking profile. Meanwhile, it is encouraging that our focus on business travellers is increasingly recognised as being amongst the best in the industry.”