Flybe announced today that its full-year results are likely to be weaker than forecast – despite the budget airline embarking on a turnaround plan.
Revenues fell 3.8 per cent to £126.8 million during the final three months of last year, Flybe said, adding that it does not expect to make a profit in the current financial year to 31 March.
Shares slumped by 22 per cent off the back of the news.
The Exeter-based company implemented the three-year turnaround plan at the start of 2014, following a drop in passenger numbers sparked by the financial crisis.
It cut over 1,000 jobs and unprofitable routes and reduced seat capacity by 6.1 per cent to 2.5 million in the third quarter of its financial year. However, the need to keep fares low has resulted in a 5.2 per cent reduction in its passenger yield to £67.65.
Shares fell almost 22 per cent today as the company said it expects to achieve break-even in the current year, when some City analysts had forecast it to make a pre-tax profit of around £9 million.
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 2016/2017 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.
Chief executive Saad Hammad said: "Flybe's improvement in its core UK business continues to progress. Only a year into our three-year transformation we now have a platform which enables us to compete in a tough environment where the consumer demands value.
"We have responded to that by keeping our fares low and launching new routes."
Looking ahead to the coming three months, the firm said seat capacity was set to jump 14 per cent to around 2.6 million seats, though passenger revenue per seat would be down by 3 per cent.
Additional reporting by Press AssociationReuse content