UK-based regional carrier Flybe recorded a net profit of £26.8 million ($40.7 million) for the first half of its 2015/16 financial year, compared to a loss of £3.4 million in the year-ago period.

Revenue was up 10.3% to £339.6 million compared to £307.8 million a year ago.

“Our turnaround is on course with a very encouraging performance in the first half,” Flybe CEO Saad Hammad said. “We have returned to profit by delivering significant revenue growth through capacity investment and improved commercial execution, while reducing unit cost.”

The airline has just completed its program of redeploying its fleet of Embraer E195s and the financial benefits of this would start to materialize in the next financial year, Hammad said.

However, he cautioned that competitive pressures are expected to grow in the second half of the current year, with the whole industry benefiting from lower fuel costs and growth in seat capacity: “Against this backdrop, we are remaining disciplined in cost control and our capacity growth plans. Our focus will be on building service frequency on our established routes to maximize our appeal to time-sensitive business travelers.”

Flybe said passenger numbers for the first half rose 10.2% to 4.5 million and the airline’s share of the UK regional market rose 0.4% to 51.2%.

The first half of the year saw a 1.6% increase in yield to £72.05, with load factor dipping 2% to 76.3%.

A 7% reduction in cost per seat (including fuel) at constant currency benefitted from a combination of lower costs of flying its surplus E195s, the non-recurrence of one-time charge of £4m for historic liabilities, together with lower costs in aircraft ownership and marketing.

With progress on the profits front, the carrier now intends to deploy more capacity on its European routes.