Regional airline Flybe has reported pre-tax losses of £19.9 million for the financial year to March 31st.
The news comes despite revenues rising 13.4 per cent to £707 million.
Following the results, Flybe said it would start to reduce the size of its fleet as consumer demand slows.
An aggressive expansion plan increased capacity at the carrier by 12.3 per cent to 12.7 million seats over the past year.
However, passenger numbers have failed to keep pace, rising 7.6 per cent to 8.8 million over the period.
Flybe said the cuts are underway, with six Bombardier Q400 aircraft to be cut from the fleet next year.
The company said in a statement: “Despite the substantial progress in reducing the size of legacy fleet orders in 2015/16, Flybe has still seen significant capacity growth in a market where we witnessed slower growth in consumer demand.
“New routes and increased frequencies were targeted to cover marginal costs in the early years of operation, but do not contribute significantly to overall profitability.
“The capacity growth therefore had a negative effect on profitability.”
It added: “We will make Flybe a sustainable business that operates the best routes and at the best times to suit the needs of our customers.”