Airline’s share price nose dives after profit warning

European airline Flybe has warned shareholders that high maintenance costs on its fleet of aircraft has seen it incur higher than expected costs in the first half.

Battered by the storm force winds of Hurricane Ophelia on Monday, the airline faced economic headwinds today as its share price nosedived on news of the announcement.

Shares were down more than 15% at one point as investors reacted nervously to the announcement.

Flybe, the largest airline in terms of passenger volumes at Birmingham Airport, said the higher costs reflected its drive to improve the reliability of its aircraft, particularly the Bombardier Q400 turboprop.

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

The airline said the higher costs meant pre-tax profit was currently expected to be in the range of £5m to £10m for the first half of this financial year (H1 2016/17: adjusted PBT of £15.9m). This is after charging the additional IT costs, as previously announced, of around £6m in the first half of this year related to the development of a new digital platform.

Christine Ourmieres-Widener, CEO, 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. The net debt, as expected, remains broadly in line with year ended March 2017.”

Flybe will announce its interim results on November 9, 2017, when further information will be provided.