FLYBE’S shares tumbled 20 per cent yesterday after it warned its revenues would fall short of targets.
The regional airline, which makes 70 per cent of its revenues on UK domestic flights, said conditions in Britain had deteriorated, leading to an eight per cent sales drop in its third quarter.
Flybe’s board spent the day reassuring investors about the firm’s strategy, after it admitted that sales over the normally bumper Christmas period had been “particularly disappointing”.
Passenger numbers were in line with a year ago, but this still represents a “significant shortfall” on revenue forecasts for the third quarter, Flybe said.
The warning, Flybe’s third such alert in less than a year, sank its shares to 55p. It now has a market cap of £51.7m – down 84 per cent from its float value in December 2010.
Chief executive and chairman Jim French said Flybe’s European ventures would help the firm weather stormy conditions at home.
He said his group’s move to cut winter flights and “aggressively manage capacity and costs” would also protect its position in the market.
“I believe that maintaining volumes and growing market share at the expense of planned yield increases was the correct decision to protect the long term potential of Flybe,” he said.
Analysts at Investec slashed their forecasts, predicting a pre-tax loss of £8.5m for the year.
Merrill Lynch analysts went further, predicting a £10m annual loss.