* Full-year pretax profit 8.1 mln stg vs est 6.4 mln stg
* Revenue 620.5 mln stg vs est 623.9 mln stg
* Shares fall as much as 7 pct after Lufthansa warning
(Adds CEO, analyst comments, details; updates share movement)
By Esha Vaish
June 11 British carrier Flybe Group Plc
posted its first pretax profit in four years, beating analyst
estimates, as it exited unprofitable routes and grounded surplus
But the company's shares, which rose about 4 percent in
early trading, reversed course to drop as much as 7 percent on
Wednesday after Lufthansa AG warned that prices on
European routes were being pressured by Gulf airlines.
European airlines are being squeezed by a combination of
cost-conscious flyers, soaring fuel costs and higher airport
Robin Byde, an analyst at Cantor Fitzgerald Europe, said
there may be some downward revisions of forecasts for Flybe
after Lufthansa's warning.
Analysts on average expect Flybe to report an adjusted
pretax profit of 20.02 million pounds ($33.6 million) in the
year ended March 2015, according to Thomson Reuters I/B/E/S.
Flybe, whose investors include billionaire financier George
Soros, launched a turnaround programme last January, cutting
costs by giving up airport slots, slashing jobs, exiting
unprofitable flight routes, and grounding surplus aircraft.
The company is also revamping its image by repainting its
planes purple from white, updating interiors and introducing new
The budget carrier swung to a pretax profit of 8.1 million
pounds in the year ended March 31. The airline, which had not
made a profit since 2011, lost 41.1 million pounds in the year
to March 2013.
Revenue inched up 1 percent to 620.5 million pounds.
Analysts on average had expected a pretax profit of 6.4
million pounds, on revenue of 623.9 million pounds.
Flybe's passenger revenue per seat increased 1.8 percent to
49.70 pounds, while its load factor rose 5.4 percentage points
to 69.5 percent.
The company's move to cut fares boosted volumes without
diluting revenue per seat or total passenger revenue, Gerald
Khoo of brokerage Liberum said in a note. Khoo lifted his price
target on the stock to 190 pence from 175 pence.
Flybe shares were trading at 134 pence at 1120 GMT.
Flybe, which serves 35 UK airports, said on Wednesday its
decision last year to stop flying unprofitable routes would
impact revenue and profit in the current financial year.
"Our planned capacity reduction for this summer is about 16
percent, so first-half total revenue will reduce, but nowhere
near 16 percent," Chief Executive Saad Hammad, a former
executive at larger rival easyJet, told Reuters.
Hammad said Flybe's cost-cutting would continue to drive
improved load factors and revenue.
The company said the general economic outlook in its most
important market, the UK, has improved.
($1 = 0.5956 British Pounds)
(Writing by Karen Rebelo in Bangalore; Editing by Gopakumar
Warrier and Ted Kerr)