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Southampton's largest carrier Flybe cuts growth forecasts
11:16am Friday 10th August 2012 in Business
Flybe shares nose dived as much as 15 per cent this morning after it issued a profits warning and revealed its planes are flying from the UK less than two-thirds full.
The airline, which has 85 planes, said it expected full-year growth to be between 0 and 2 per cent, below previous forecasts, and would reveal further cost savings at the end of September.
It is the third profits warning Flybe has issued in the past year due to a slowdown in sales.
UK passenger numbers in the in three months to June 30 fell to 1.92 million, 3 per cent lower than the same period last year.
Planes flying from the UK are now 62.4 per cent full, a decrease of 0.7 percentage points.
Flybe UK’s revenues rose 0.7 per cent £156.4 million in the first quarter. The group’s total revenues, including its European operations, rose 20.4 per cent to £193.2m.
Jim French, Flybe's chairman and chief executive, said: “2012/13 is proving to be another very challenging year in the European regional aviation sector with continued weak consumer markets and stubbornly high oil prices.
"After four years of consecutive decline, the UK domestic air market had shown signs of stabilising this year although June slipped back into 3 per cent year on year decline.
He added: “We remain cautious over the outlook and do not expect a material recovery in either consumer or business confidence in the short term.
“We therefore remain focused on executing our comprehensive action plan to both grow the business whilst mitigating cost pressures.”
Mr French added said Flybe’s market share in the UK remained above 50 per cent, and it had a “robust and flexible” business model and clear growth plans.
“Although we expect market conditions to remain challenging, we remain confident about Flybe's long term future,” he said.
Shares fell 15 per cent to 64p this morning. The company is valued at about £48m.