CITY REACTION
Regional airline Flybe has suffered profit turbulence after racking up higher-thanexpected aircraft maintenance costs.
In a stock market update yesterday, the carrier said that its drive to improve the reliability of its aircraft, in particular the Bombardier Q400 turboprop, would see earnings fall in the first half of the year.
Adjusted profit before tax is now forecast to come in at between £5 million and £10m during the period, down from a consensus estimate of £15m.
The reduced figure contracts with a £15.9m profit in the same period last year and also factors in additional, previously announced, IT costs of about £6m related to the development of a new digital platform.
Chief executive Christine Ourmieres-widener told investors: “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
0 Christine Ourmieres-widener, CEO, pictured at Edinburgh Airport
ANALYSTS AT NUMIS these in the second half and remain focused on improving our cost base and reliability performance.”
She added: “Our sustainable business improvement plan is delivering benefits with the fleet size now reducing, and consequently both yield and load factors are increasing. The net debt, as expected, remains broadly in line with year ended 31 March 2017.”
The firm said further information would be provided when its announces its interim results on 9 November.
The announcement comes after slowing consumer demand and over-capacity sent Flybe swinging to a fullyear loss last year. It posted a £19.9m pre-tax loss in the year to the end of March, compared with a profit of £2.7m the previous year.
Analysts at Numis said they had their “hold” rating on Flybe’s shares under review following the announcement.
They noted: “Although the group has reported significant cost pressures, it believes that its sustainable business
“Our recommendation and target price are under review as we await further guidance at its results on 9 November”