Originally Posted by
ATNotts
Two things in play here I suspect. First firming of the oil price, which may have hit them if they had failed to hedge forward; and second the fall in value of sterling which will not only have had an effect of existing revenues, but may be beginning to impact on future bookings - for example second property owners in France making fewer, longer trips, rather than going backwards and forwards more frequently at weekends.
Flybe will also see more harm than most other UK airlines with the fall of GBP as they will have a higher percentage of revenues in GBP vs other currencies. Since a fair portion of their costs are in USD or EUR they will have a weaker cash-flow. This is especially true if their hedges on fuel are either non-existent or in USD.
As for the UK economy being in good health. It isn't as clear cut as the GDP in £ numbers make it seem. Looking at the value of GDP in some other currencies will see a drop in GDP over the last year. Conversely if you look at the value of the US economy in GBP it has grown a lost faster than the UKs. Even in $PPP the UK isn't as strong as the headline figure. I haven't looked at the numbers recently, but I seem to recall the GDP:GNP ratio has shifted quite a bit, which is often a sign of underlying weakness. It remains to be seen where this will lead, but it looks like the North Atlantic market is really beginning to suffer, especially for the areas outside of London.