- Reuters/Andrew Yates
LONDON – Flybe has become the latest carrier in Britain’s stricken airline sector to hit trouble after issuing a profit warning to investors on Wednesday.
In a statement to the markets, Flybe – Britain’s third largest airline behind easyJet and British Airways – said that its profits for the first half of the 2017/18 financial year are now expected to be between £5 million and £10 million, a downward revision from a forecast of £15.9 million.
Flybe has blamed the profit warning on “higher than expected” costs related to its fleet of aircraft, “particularly the Bombardier Q400 turboprop.”
“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,” Flybe CEO Christine Ourmieres-Widener said in a statement alongside the announcement.
“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.”
Investors in Flybe have not taken reacted well to the company’s announcement, and in early trading share dropped by as much as 19%. By 8.20 a.m. BST (3.20 a.m. ET) a small rebound is underway, although shares remain close to 16% lower, trading at 37.5 pence each.
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Flybe’s profit warning adds to the woes of the UK’s already turbulent airline sector, following the collapse of Monarch Airlines earlier in October. Monarch, which was the UK’s fifth largest carrier, went under at the beginning of October becoming the biggest airline failure in the history of British aviation and leaving approximately 110,000 travellers stranded abroad.
That followed a series of problems for Irish carrier Ryanair, which was forced to cancel thousands of booking this winter after a rostering error caused a backlog of staff holiday days due at the end of the year. The cancellations are set to impact as many as 700,000 passengers and caused a major PR crisis for the company.