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Portfolio>FLYB>Investment Rationale
FLYB Investment Rationale

Reasons for invesment:
- Temporary pessimism due to Brexit
- Brexit share price decrease of 28% on news (similar the SP decrease of other UK airlines) despite Flybe's strong position in the domestic routes market

Merits:
- Strong position niche position in domestic routes (~50% market share) with a focus on growing and retaining this business
- Low exposure to the uncertain effects of Brexit (relative to competitor airlines)
- Well-defined growth plan set forth by management
- Consistent reduction in unit costs
- All legacy issues from previous management now resolved/removed

Concerns:
- Load-factor reduction as passanger capacity increases due to new route launches (a temporary effect if new routes are successful)
- Risk of below-expectations growth in passenger revenue from new routes could lead to further market pessimism
- Increased price competitivity on European and domestic routes (though Flybe has a relatively low unit costs in the domestic arena equating to a small competitive advantage)
- Low unit cost position relative to other airlines may mean further reductions in unit cost are not feasible
- Large exposure to road/rail improvements