Flybe notes slow start to final quarter

(Reuters) - Airline Flybe Group Plc said uncertain customer confidence and poor weather led to a slow start to the current quarter, after tough trading conditions and increased market capacity hit its fleet utilisation in the third quarter.

However, the airline, which connects British regional airports to London and other European cities, said on Monday its third-quarter revenue grew, boosted by additional capacity in its network.

Passenger revenue grew 13.5 percent in the third quarter ended December 2016, compared with a 5.7 percent increase in the first half. Revenue per seat rose 0.2 percent in the third quarter versus a decline of 6.9 percent in the first half.

European airlines have driven down fares by adding more seats to boost their market share in a period of low oil prices.

They have also experienced some demand turbulence over the past year due to uncertainty arising from Britain's decision to leave the European Union, a string of attacks in Europe and lower appetite for corporate travel.

Flybe cautioned in November that the Brexit vote could affect the aviation industry "operationally and commercially," and posed short-term challenges because of the pound's sharp slide.

The following month, it named Christine Ourmieres-Widener, former head of rival CityJet, as chief executive.

Flybe said on Monday that passenger revenue rose 11 percent in the first three weeks of its current quarter compared with a year earlier, but revenue per seat fell 1 percent.

"There is much to be done... my first priority is to look to rebuild passenger unit revenue and to challenge all our costs," Ourmieres-Widener said in a statement on Monday.

Analysts expect Flybe to pursue additional codeshare agreements with long haul airlines operating into Heathrow, after the airline announced in December new routes from Edinburgh and Aberdeen to Heathrow starting in March 2017.

The company said on Monday the new routes would allow for connectivity with its codeshare partners and that it would add further connectivity over the coming months.

Larger rival easyJet warned this month that the weaker pound and rising fuel costs would hit profit more than expected this year.

(Reporting by Esha Vaish in Bengaluru; Editing by Amrutha Gayathri)