Regional operator Flybe Group is planning more cost-saving measures after predicting a poor full-year outlook.

The group has turned in a 1.6% rise in first quarter revenues, to £163 million ($254 million), and says the revenue trend for the year to 31 March 2013 will be "below our previous expectations", with growth between zero and 2%.

Owing to this revenue outlook the company is aiming for further cost-saving measure, including capacity management and a reduction in supplier costs.

It believes the impact of these measures - which it will detail in its half-year results - will limit group costs, including fuel, to a 2.5% rise.

Flybe Group's first-quarter figures illustrate the effect of its contract flying operations, which helped offset a decline in its UK passenger business.

UK division passenger numbers were down 3%, and overall UK revenues of £156 million were only fractionally up on the previous year.

But its Flybe Europe division - comprising joint venture Flybe Finland and Finnish Aircraft Maintenance - generated revenues of £30 million, of which over £19 million was achieved through contract flying for Finnair.

In a first-quarter interim management statement Flybe Group says the entry into continental Europe has "driven" a 20% increase, to £193 million, in revenue under management.

Flybe's UK operation also performs contract flying with Brussels Airlines. This UK division brought in £2.1 million in contract revenue during the quarter.

Chief executive Jim French says weak consumer markets and "stubbornly high" fuel prices are turning 2012-13 into "another very challenging year" for the European regional sector.

"We remain cautious over the outlook and do not expect a material recovery in either consumer or business confidence in the short term," he says. "We therefore remain focused on executing our comprehensive action plan to both grow the business while mitigating cost pressures."

Flybe has not included a profit or loss figure in its interim statement.

Source: Air Transport Intelligence news