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Flybe – share Price Over-reacts to Trading Statement

By Chris Oil | Tuesday 27 January 2015

Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I warned in my last piece on Flybe (FLYB) HERE, that you should reduce your holdings. I apologise for not saying sell altogether as the shares tanked on the back of a trading statement yesterday. So what now at 66p. 

The statement is explicit. There is no way that the company can make the £20 million pre-tax we had once hoped for in 2015 and 2016 forecasts of £50 million are now also pie in the sky. A new broker note which I have just received has cut forecasts dramatically and set a 140p target. We shall see. 

Flybe clearly hedged its fuel costs at vastly higher prices than expected so has NOT benefited from the 60% fall in oil prices, one of the main reasons for investment in this recovery play. However positive forward booking numbers partially compensate for this but even the increase boasted of is not as great as some had hoped for. 

The best we can hope for in 2015 is breakeven which is a big disappointment for people such as me seeking a hedge on our oil investments clearly Carnival was the way to go on reflection. 

What to do now? I think the share price has overreacted. Flybe still has strong cash backing from the last placing at 110p and so I would be holding for now with a view to selling out completely when the shares climb back to c100p. 

I still hold a tiny amount in the vain hope that Flybe can turn it around for 2016. This years is a write off for Flybe..  

Until the next time more ramblings at the castle can be [email protected]


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  1. Fast jet is what you should buy ………… fuel totally unhedged ………. share price climbing .

  2. Daniel Victor

    Where’s the good news likely to come from to cause the shares to rally.? Flybe is competing with other airlines who didn’t hedge so much of their fuel costs.Saying that Flybe made a bad call by hedging seems a bit unfair/harsh on the management,but the market is a cruel judge sometimes.By the time that Flybe’s hedging-at-higher-prices runs out,the oil price will probably have started to rally.

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