Flybe Group PLC (LON:FLYB) said flight cancellations caused by heavy snowfall in February and March hurt full year revenue but shares soared as it issued a positive outlook on summer trading.
The so-called ‘Beast from the East’, which brought snow and strong winds from Siberia to the UK and many regions across the European continent, led to airport closures and flight cancellations.
Flybe had to cancel 994 flights due to poor weather in the fourth quarter, compared to 372 the same period a year ago.
The flight cancellations will result in £4mln of lost revenue, which will be reflected in the full year results.
Early indications of summer trading 'encouraging'
On the upside, Flybe said early indications of summer trading are “encouraging” with an estimated 7.5% increase in passenger revenue per seat offsetting a 7.9% drop in capacity.
The airline has sold 21% of its first half capacity so far, compared to 20% the same time last year.
READ: Flybe shares descend after airline issues profit warning, blaming higher maintenance costs
Chief executive Christine Ourmieres-Widener said the company’s strategy to reduce its fleet is delivering higher load factors -- which measures the number passengers against the number of seats available -- and revenue per seat.
“The drive to reduce costs is continuing, given added impetus by the rise in fuel prices and lower value of sterling,” she said.
“Despite these headwinds, the foundations are being put in place to strengthen the business and we remain confident that our strategy will continue to improve performance as we go into the new financial year."
Shares rose 2.58% to 34.36p.
Liberum says Flybe's commercial strategy is delivering
Liberum left its rating on the stock at ‘hold’ and its target price at 36p, saying capacity reductions are continuing to support strong improvements in load factors and unit revenues.
“Forward booking data indicate these trends are continuing into the new FY, despite a significantly tougher comparative,” the broker said.
“However, we are cutting forecasts again to reflect the impact of adverse winter weather disruption in the March 2018 year and higher fuel costs in March 2019.
“The encouraging commercial performance needs to drop through to the bottom line for the shares to perform.”