BRITISH regional airline Flybe jolted the City with a profits warning yesterday that saw its shares dive about 22 per cent to 70.5p.
The company said in a trading update that revenues fell 3.8 per cent to £126.8 million during the final three months of last year. It now does not expect to do better than break even in the financial year to end-March 2015.
Flybe, which flies from many UK airports, including Aberdeen and Edinburgh, is one year into a three-year turnaround plan that has seen it shed 1,000 jobs and some unprofitable routes after passenger numbers fell following the financial crash.
It reduced seat capacity by more than 6 per cent to 2.5 million in Q3, but said but the need to keep fares low resulted in a 5.2 per cent reduction in its passenger yield – revenue per seat – to £67.65.
Chief executive Saad Hammad said that, despite the profit warning, Flybe now had a business model “which enables us to compete in a tough environment where the consumer demands value”.
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Looking to the coming three months, the firm said seat capacity was set to jump 14 per cent to about 2.6 million seats, though passenger revenue per seat would be down by 3 per cent.
Broker Liberum cut its annual pre-tax profit forecast to £100,000 from £8.8m. Flybe also warned that it will not benefit from the recent fall in oil prices as its long-term hedging policies will be in force until the 2016-17 financial year.
The carrier had posted its first pre-tax profit in four years last June but swung back to a half-year loss by November due to one-off costs and a charge related to the exit from its loss-making joint venture, Flybe Finland.