FLYB issued an RNS today (http://is.gd/2jT4v7) for 6 m/e 20 Sep 2014: “Flybe’s positive momentum continues”. Passenger revenue per seat increased 8.7%, and load factor increased to 77.2%. Despite this, shares declined 15.4% to 111.5p.
I had said, back in March (http://is.gd/Q3NfwU), when the shares were at 125.75p, that I thought they were fairly priced, optimistically. The subsequent price action made me feel foolish almost immediately, as the shares continued to climb to 152p. It looks as though many felt that I had failed to account for the growth prospects of FLYB. It was, quite possibly, a fair criticism.
Imagine my surprise, therefore, to find that the share price is now actually below where I sold them. At the time, the shares were experiencing a lot of BB interest. I wouldn’t necessarily say that it was a contrarian indicator, but the RSI did reach in to 90’s in April, so investors should have at least considered the possibility that all the bulls who wanted in were in.
The Motley Fool picks up the story behind the share drop (http://is.gd/ldsMpa), noting the impairment of assets as loss-making Flybe Finland was sold to Finnair for 1 EUR. Revenues fell by 12.3%. The airline continues to streamline itself.
Of particular personal interest to me is that I noticed Flybe set up a route from Aberdeen to London City Airport. Although it was a long time ago, I found London City to be convenient for visiting my folks in Aberdeenshire. I did observe at the time, though, over a decade ago, that quite a few airlines tried that route and couldn’t make a go of it. Hopefully things have changed since then. Setting up base in Aberdeen sounds like great news for me as a potential passenger. I’m interested in their Spanish destinations.
Other than that, I’m out-of-touch with what’s going on with FLYB, so I have no real opinion on them. It seems that the market was spooked by the greater-than-expected impairment charge and flight delay provisions. Liberum notes that the results were below their forecasts. So things were bound to get at a little ugly.
Update 21-Nov-2014: I note that on Wed 19-Nov-2014, Standard Life issued an RNS stating that they took their holding above 9%. When the results were issued on the 12th, Liberum trimmed their price target from 190p to 180p. On the 13th, HSBC trimmed it from 170p to 135p. So the brokers are clearly having at least some hesitancy on the results. Paul Scott was upbeat on the update. Another highly-regarded private investor seemed happy enough with the result. Momentum isn’t good on this share at the moment. It’s not quite in oversold territory, so investors may want to hold off for a little while if they’re thinking of taking the plunge. This share is too tough for me to call.