Flybe progress overshadowed by booking uncertainty and currency costs

LONDON (Reuters) - Shares in Flybe (FLYB.L) slumped to an 11-month low on Thursday after the British regional airline reported a drop in the level of bookings for coming months and warned over the impact of the strength of the dollar.

Flybe, which is coming to the end of a turnaround plan started in 2013, said it was on track for a pretax profit of 3 million pounds for the 12 months ended March 31 2016, against a 25 million pound adjusted loss last year.

But shares in the company, which connects British regional airports to London and other European cities, traded down 8 percent at 58.8 pence by 1022 GMT, having fallen as low as 53.75p, their lowest since May last year.

Cantor analyst Robin Byde blamed the lack of a more positive outlook. "I think they've done very well on restructuring capacity and fleet but demand still just seems to be too weak on the routes that they fly," he said.

"You've had a number of investors decide that trading is not going to get significantly better any time soon and it's time to sell," Byde added.

Flybe, which says that about half its customers are travelling for business, said that for the six months ended Sept. 30 2016, 21 percent of its capacity had already been sold, 3 percentage points behind the previous year.

Like all airlines, Flybe pays for fuel in dollars. It said the strengthening dollar would cost it 7 million pounds in its 2016/17 financial year, despite it hedging exposure to fuel and the dollar at a higher level.

Flybe said its turnaround plan had made progress, and the last six months showed its business model was working. It maintained forecasts despite a drop-off in demand for business travel in the wake of the Paris attacks last November, and an increase in capacity in European flying.

"Despite a really difficult revenue environment ... we're really pleased that Flybe's able to demonstrate its resilience," Chief Executive Saad Hammad said in an interview.

Over the last six months, Flybe has slowed planned capacity expansion and accelerated a cost-cutting plan to, for example, renegotiate maintenance contracts, to help it maintain profitability.

(Reporting by Sarah Young; Editing by David Holmes)