Flybe hits turbulence as it issues profit warning
The regional airline said its drive to improve the reliability of its planes will see profits dive in the first half of the year.
Regional airline Flybe has warned over profits after incurring higher-than-expected aircraft maintenance costs.
The firm said its drive to improve the reliability of its planes, in particular the Bombardier Q400 turboprop, will see profits dive in the first half of the year.
Flybe said adjusted profit before tax is forecast to come in between the range of £5 million to £10 million in the period, down from a consensus estimate of £15 million.
The diminished figure, which compares with a £15.9 million profit in the same period last year, also takes in additional IT costs of £6 million linked to the development of a new digital platform.
Chief executive Christine Ourmieres-Widener said: “While half-year profits are lower than expected, I am confident that we are still on a clear sustainable path to profitability in line with our stated plan.
“The increased maintenance costs are disappointing, but we are already addressing these in the second half and remain focused on improving our cost base and reliability performance.”
The announcement comes after slowing consumer demand and over-capacity sent Flybe swinging to a loss last year.
The firm posted a £19.9 million pre-tax loss in the year to March 31, compared with a profit of £2.7 million the previous year.
However, Ms Ourmieres-Widener added: “Our sustainable business improvement plan is delivering benefits with the fleet size now reducing, and consequently both yield and load factors are increasing.”
Shares in Flybe tumbled more than 15% in morning trading to 38p as investors took flight.