Flybe’s shares have taken another nosedive after the regional airline issued a profits warning.
About 40% was wiped off the company’s value in trading on Wednesday after Flybe forecast “softening” revenues over the next six months due to falling consumer demand. The closing share price was just 19p.
Underlying annual losses at the airline are now expected to worsen to £22m in 2018-19, excluding a one-off £10m windfall from returning leased planes.
Flybe said a strategy of concentrating on popular routes had significantly increased revenue per seat, by 6.8% in the second quarter, and meant its fullest ever planes in the summer.
But the airline, which flies about 9 million passengers a year on its 78-strong fleet, has been buffeted by higher fuel prices and the weak pound.
Flybe said the impact of sterling’s depreciation, and fuel and carbon emissions offsetting price increases would add £29m to costs year-on-year, while its margins were further diminished by the removal of credit card fees since January.
The trading update marks another low for the airline, which is now valued at just £40m, a fifth of its value on flotation in 2010, despite several attempts to turn around the company and swingeing redundancies in 2013-14.
Christine Ourmières-Widener, who took over as Flybe’s chief executive at the start of 2017, said: “We have made progress in driving our unit revenues across the summer season, but we are now seeing a softening in the market. We are reviewing further capacity and cost-saving measures.
“Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months, particularly against the headwinds of currency and fuel costs. We continue to strengthen the underlying business and remain confident that our strategy will improve performance.”
The transport analyst Gerald Khoo at Liberum said Flybe still had “turnaround potential” if it implemented new commercial systems and brought costs under control with cheaper aircraft leases.
But he added: “External industry-wide headwinds from weaker demand and a more challenging environment [on fuel and currency] continue to more than offset management’s actions. It is unclear when the balance will become more favourable.”
