Profit warning hits Flybe founder in the pocket

Wednesday 11 January 2012 01:00
Comments

Jim French, Flybe's founder and chief executive, was nursing losses of more than £550,000 yesterday as the regional airline's second profit warning in three months sent the shares to a record low.

Mr French, who owns 5.34 per cent of the carrier, warned that the UK domestic market was "clearly challenging" as Flybe endured a particularly disappointing December. The shares plunged 20 per cent to 55p, wiping more than £8m off the airline's value.

Flybe is suffering from sluggish UK trading, which accounts for 70 per cent of its business. Its sales slump worsened from an underlying 6 per cent slide in the first half of the year to 8 per cent between October and December.

Mark Manduc, an analyst at Bank of America Merrill Lynch, said: "Assuming that Q3 trends continue into Q4 – and no material cost changes – we expect consensus for 2011-12 to move to a pre-tax loss of around £10m."

Mr French, whose airline operates 203 routes serving 18 countries, defended his decision to keep growing market share by sacrificing price increases to "protect the long-term potential of Flybe".

The company is selling off surplus aircraft and "aggressively" managing capacity and costs, as well as broadening its reach in moves such as its recent swoop for Finnish Commuter Airlines.

"We identified some time ago the need to lessen our dependence on the UK market and our move into Europe last year is progressing well," Mr French said.

Andrew Fitchie, an analyst at Investec, said: "Given the likely disappointment over a further downgrade and the remaining uncertain trading outlook, it is difficult to see the share performing in the short term."

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new 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 in