Flybe profits hit by higher fuel prices and weaker pound

Demand has weakened in the UK and continental Europe over recent weeks, airline said

Caitlin Morrison
Wednesday 17 October 2018 09:52 BST
Comments
The airline said demand had waned in recent weeks, and it expects this to continue
The airline said demand had waned in recent weeks, and it expects this to continue

Budget airline Flybe has warned that profits will drop in the second half of the year, due to a combination of lower demand, higher fuel prices and weaker sterling.

Shares in the company plummeted by more than a third after the firm issued the profit warning.

The group said consumer demand in both domestic and continental markets has weakened in recent weeks, and said it now expects this to continue in the second half.

Combined with increased fuel costs and the continued weakness of the pound, will lead to an estimated £29m dent in profits. The company now predicts that it will report a pre-tax loss of £12m for the current financial year.

Christine Ourmières-Widener, chief executive officer, 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 while continuing to focus on delivering our sustainable business improvement plan.

“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."

Analysts at Liberum said there are opportunities for Flybe to help itself, noting that the airline could increase revenue by putting in place new commercial systems, but said any attempts at self-help would be “more than offset” by current challenges linked to exchange rates and fuel prices.

Earlier this year, Flybe said the Beast from the East had wiped £4m off its revenues, due to flight cancellations and delays and airport closures.

Severe cold weather in February and March threw many people’s travel plans off track as snow, ice and strong winds wreaked havoc across the UK and Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.

Support free-thinking journalism and subscribe to Independent Minds

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in