The airline's share price dropped over eight per cent on the news.
Flybe reported a load factor of 68 per cent for the fourth quarter, down two percentage points on the prior year.
However, passenger volumes were maintained at 1.8m for the three months ending 31 March.
The airline said passenger revenue is in line with the year prior.
Revenue will be reported with full year results later this year.
Why it's interesting
Flybe said that seat capacity was increased at a lower rate during the fourth quarter due to tragic terror attacks in Paris in November.
That meant the airline could mitigate lower load factors.
Load factors (the proportion of seats taken up per flight) were down, although passenger numbers were constant compared to the prior year.
Yesterday EasyJet said its traffic volumes in March were hit by the Belgium terror attacks,
Flybe said that summer trading is on track, with a 17 per cent increase in capacity compared to the prior year.
However, while 21 per cent of capacity has been sold, that's three percentage points behind a year ago. The group is trying to target business customers who book closer to the date of travel.
The company said revenue is in line with expectations, but don't report figures at the four quarter. Instead revenue will be reported with the full year results. Flybe added that results for the full year to March 2016 are anticipated to be in line with market expectations.
But the rise in the value of the dollar since the turn of the year has impacted 2016-2017's operating costs by £7m, the company said.
What Flybe said
Saad Hammad, chief executive, said:
This last year has seen enormous progress at Flybe. We completed the resolution of the key legacy issues while significantly improving our service and customer offering. We are carrying more passengers across a growing route network and doing so at a lower unit cost.
We look forward to making further progress over the coming year as we enter the next chapter of our journey which is focused on disciplined and profitable growth.