What a week for Flybe! The shares certainly soared, but what do investors do now?
The Exeter-based airline's half-year results were certainly encouraging as revenues were up, profits were up, passenger numbers up and the turnaround plan on track.
Since the announcement, Rosedale, Flybe's largest shareholder, has announced that they have sold their stake, which amounted to a massive 48.1 per cent of the issued share capital.
The free float, which is the number of shares that can now be traded, is expected to increase to 85 per cent of the issued share capital. As a result the shares then fell by as much as 16 per cent. Rosedale Aviation is controlled by the family trust of the late Jack Walker, the founder of Flybe.
The largest holders of the stock are now International Consolidated Airlines Group, the owner of British Airways, which has a 15 per cent stake. Other large holders include billionaire investor George Soros and the recently departed chairman Jim French.
However competition remains extremely tough in the airline industry. Easyjet reported a sharp rise in profits this week and announced a special dividend to shareholders – how Flybe shareholders would like that sort of news! Their profit rose by a massive 51 per cent, helped by strong revenues across its European routes.
Over the last few weeks I have had the opportunity to fly with Flybe and they have some way to go to match the other discount carriers. Easyjet now has a policy of allowing passengers to change their flight up until two hours before departure and allocated seating. I had to give them two day's notice to carry another suitcase.
Investors would be well advised to continue to hold their shares for the time being. I have written many times about the consumer being under pressure from low wage growth and high inflation and although this will continue for a while there are signs of light at the end of the tunnel.
Shareholders have been rewarded for holding on this far from the depths of despair and a little more patience should be well rewarded. However, Flybe need to keep up with the competition, so watch this space.
Meanwhile globally, markets continue to rise at a pace. The US markets are looking particularly strong with the Dow rising through 16,000 and the broader S&P 500 touching 1,800. Investors are in the right place at the moment and should continue to ride this particular wave.
