Flybe issues new profit warning as costs rise

Flybe issues new profit warning as costs rise

Flybe has said, following a detailed review of aircraft maintenance, it has incurred higher than expected related costs in the first half of financial 2017.

This reflects the drive to further improve the reliability of its aircraft, particularly the Bombardier Q400 turboprop, with improvements already being seen, the carrier said.

A full review of the maintenance strategy has now been launched which aims at a significant improvement of aircraft performance and costs.

As a result, adjusted profit before tax is currently expected to be in the range of £5-£10 million for the first half of this financial year.

The airline reported a £16 million profit on this basis in the comparable period last year.

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Shares in Flybe dropped 20.5 per cent to 35 pence, before recovering to trade 13.6 per cent lower at 38 pence, following the news.

This is after charging the additional IT costs, as previously announced, of around £6 million in the first half of this year related to the development of a new digital platform.

Flybe 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.

“Our Sustainable Business Improvement Plan is delivering benefits with the fleet size now reducing, and consequently both yield and load factors are increasing.”