Regional airline Flybe, which operates a range of routes from George Best Belfast City Airport, has warned jobs may be at risk as it slashes costs after the most challenging conditions in its 10-year history sent it into the red.
The Exeter-based carrier outlined plans to make annual savings equivalent to £2 per seat as it said there was “little sign of recovery” in the UK domestic market.
It warned there may be some impact on its workforce - consisting of 3,000 staff in the UK and up to 700 in Europe - as part of a group-wide review of costs, but will give further details in the new year.
Flybe reported pre-tax losses of £1.3 million in the six months to September 30 against profits of £14.3 million a year earlier after being hit by sky-high fuel costs and falling numbers of fliers.
The group, which also flies from Bristol, Cardiff, Doncaster, Edinburgh and East Midlands airports, saw UK passenger numbers fall 3.6 per cent to 4 million in the half-year.
Its fuel costs leapt 22.7 per cent to £68.6 million, or from £8.73 to £11.06 per seat, and it said demand was being stifled by air passenger duty hikes.
The group said: “Flybe is currently operating in possibly the most challenging conditions since its creation as a new-generation regional airline 10 years ago.
“The UK domestic aviation market has seen passenger numbers reduce by 20.6 per cent since 2007, UK air passenger duty increased by 160 per cent over the same period and fuel prices are at record annual highs.”
Shares fell 6 per cent, with yesterday’s results coming after the group warned over full-year profits in August.
Revenues at Flybe UK were held largely firm at £328.5 million in the first half and the group said forward sales for winter were ahead by around 2.5% year-on-year in the UK after cutting capacity to match lower levels of demand.
But chief executive Jim French said the group had no choice but to cut costs in the UK, with “no sign of any glimmer of hope” of a turnaround in the UK market.
He added: “We can no longer wait for the economy to turn or for fuel prices to fall or the Government to reduce taxes.”
The group’s revenues have also been hit after the Office for Fair Trading scrapped hidden debit card charges in April, which it said added “a considerable extra financial burden”.
Flybe has been increasingly setting its sights on continental Europe to offset the UK woes and last year formed a joint venture with Finland’s flag carrier Finnair.
Its European operation now accounts for 40 per cent of business and the group is looking to make further tie-ups and acquisitions.
The group has issued a series of profits warnings in recent years, causing its shares to slump in value from about 325p at the time of its flotation at the end of 2010, to 52.4p yesterday.