Airline's shares in dive after warning

SHARES IN British Regional Airlines, which was floated less than three months ago, crashed by more than half yesterday after the group warned of falling passenger yields and its broker slashed its profit forecast for the year by pounds 1m.

The group, which operates 86 routes under the Manx Airlines banner and as a British Airways franchise, blamed the profits warning on the economic climate, poor weather, the World Cup and a fall in the number of passengers travelling business class.

British Regional Airlines was floated for 150p a share in June, valuing the business at pounds 97m. Yesterday the shares fell 53 per cent from 108.5p to 50.5p, valuing the company at pounds 33m.

The chairman, Sir Michael Bishop, who retains a stake of just under 30 per cent in the business, said that although passenger numbers had increased in line with expectations, yields had dropped.

In the first six months of the year they were 9 per cent lower than the same period in 1997, and yields in July and August were also lower than expected.

Traffic numbers were also lower than budgeted on a number of key routes, including the Isle of Man-Heathrow service.

Sir Michael said: "In light of the general economic climate and evidence to date within the airline, the company has deemed it prudent to make allowances in its budget for a continuation of this trend for the remainder of the year."

Dresdner Kleinwort Benson, which acts as the group's broker and also handled the placing in June, cut its profit forecast for the full year from pounds 5.8m to pounds 4.8m.

Part of the problem is that, while traffic numbers have largely held up, more passengers have been taking advantage of cut-price fare offers.

In a bid to raise yields, the group raised prices on some routes by 2 per cent at the beginning of this month and is planning further price rises of 3-4 per cent later in the autumn.

It has also withdrawn from four routes in the Highlands and Islands and retired its fleet of ageing Shorts 360 aircraft.

The group reported a loss of pounds 487,000 for the six months to the end of June, compared with a pounds 511,000 profit in the same period last year. This was due to launch costs of its Inverness-Gatwick service and the introduction of new Embraer 145 regional jets.

Passenger numbers were up by 11 per cent to 1.2 million but capacity increased by 36 per cent over the period. This resulted in a fall in load factors - the percentage of seats filled - from 62.8 per cent to 60.6 per cent.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little