SOUTHAMPTON Airport’s biggest carrier, Flybe, has reported losses of more than £40m, it has been revealed.

But the company said it had ramped up its cost-cutting drive to steady the business after a turbulent year sent it nose-diving deeper into the red.

The carrier now hopes to make annual savings of £50m by 2014/15 after slashing more than 20 per cent of its workforce and cutting pilot pay by up to five per cent.

Flybe insisted its recovery efforts were helping it make “significant steps in the right direction”, having also recently quit Gatwick Airport by selling its runway space amid plans to concentrate on its core bases, such as Southampton, Manchester, Birmingham and the Channel Islands.

But it admitted it had been a “disappointing” year as underlying pre-tax losses widened to £23.2m in the 12 months to March 31 from £7.1m after being squeezed by higher fuel costs and a declining domestic market.

Bottom line losses increased to £40.7m from £6.2m a year earlier.

Jim French, Flybe chairman and chief executive, said: “We have taken difficult decisions as part of our turnaround plan, which have affected all our people.

“Challenging as they have been, these decisions were critical to ensuring the future success of Flybe.”

The group has secured £30m of cost savings for 2013/14 against the £25m previously expected and aims to increase this by another £20m over the next two years.

It has already cut around 490 roles, with a further 90 planned in the current financial year.

Flybe is also selling 25 pairs of take-off and landing slots at Gatwick to rival easyJet for £20m to raise vital funds in a move that will see it will cease all flights from the airport, where it currently flies more than half a million passengers to destinations around the UK.

A wider review of its routes and network is still ongoing.

Mr French said recent actions meant it was “now more strongly placed for the future”.

He added: “Our choices with regard to cost savings, outsourcing, head-count reduction, aircraft delivery deferrals and the sale of our Gatwick slots demonstrate the resilience and single-mindedness of the management team to turnaround Flybe.”

Its UK operations posted underlying losses of £17.3m against pre-tax profits of £200,000 the year before.

UK passenger numbers fell 1.1 per cent to 7.3 million as it cut capacity by 2.7 per cent.

The group’s other division – Flybe Outsourcing Solutions, which includes its Flybe Finland joint venture, contract flying arm and training academy – was also in the red with underlying losses of £2.3m.

But Flybe shares leapt 9 per cent higher after the full-year results, with analyst Gerald Khoo at Espirito Santo forecasting a sharp reduction in losses as the cost cutting plans take effect.

He predicts that Flybe will break-even in the current financial year.