Turbulence ahead: Flybe shares plunge as it predicts £12m loss from pricier fuel
UK regional airline Flybe has warned that it will make a £12m (€13.6m) loss this year as it takes a £29m hit from higher fuel costs and currency impacts.
Shares in the carrier plunged almost 40pc during the day, slashing its market capitalisation to just £42m. The shares were changing hands at as little as 19p in London yesterday. That's about 60pc less than the 47p they soared to back in February on the day that transport group Stobart said it was considering making a bid for the airline. Yesterday's share price is also well below the 35p Flybe's shares sank to in March, when Stobart said it wouldn't pursue the acquisition.
Flybe, headed by CEO Christine Ourmieres-Widener, said that while it had a good first-half performance, recent trading indicates a softening in the second-half revenue outlook.
"Consumer demand in domestic and near-continent markets has weakened in recent weeks and the board now expects this to continue into the second half," said the airline yesterday.
"This together with higher fuel prices and weaker sterling will impact the expected H2 profit performance."
"While the board's visibility on fourth-quarter revenue is limited at this stage, it is now estimated that the full year adjusted loss before tax will be of the order of £12m, including the benefit of a circa £10m onerous lease provision release," it said.
The projected loss includes an estimated £29m of adverse year-on-year impact from weaker sterling, fuel and carbon prices, the airline confirmed.
"We are reviewing further capacity and cost saving measures while continuing to focus on delivering our sustainable business improvement plan," said Ms Ourmieres-Widener. "Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months."