Flybe Group Share News (FLYB)

(Sharecast News) - Shares in Flybe tanked on Wednesday as the budget airline said full-year adjusted profit would be below market expectations as annual results take a £29m hit from a weaker pound and higher fuel prices.The company said it now expects to make a full-year adjusted pre-tax loss of £12m, including the benefit of a £10m onerous lease provision. This is better than the £19.2m loss it recorded the year before but below market expectations.Flybe said consumer demand in domestic and near-continent markets has weakened in recent weeks, a trend it now expects to continue into the second half. This, together with higher fuel prices and weaker sterling will impact the expected second-half profit performance.The group said its strategy of reducing capacity to focus on its most popular routes has delivered higher load factors and revenue per seat. In the second quarter, load factors - which gauge how full the flights are - were up 7.2 percentage points year-on-year to 86.6%, a record load factor for the summer season. Meanwhile, passenger revenue per seat was up 6.8% as capacity reduced by 10%.For the first half as a whole, the load factor was up 8 percentage points to 84.0%, with passenger revenue per seat estimated to be up 8%. Yield, however, was down around 2%.Chief executive officer Christine Ourmieres-Widener said: "We have made progress in driving our unit revenues across the summer season, but we are now seeing a softening in the market. We are reviewing further capacity and cost saving measures while continuing to focus on delivering our Sustainable Business Improvement Plan."Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months, particularly against the headwinds of currency and fuel costs. We continue to strengthen the underlying business and remain confident that our strategy will improve performance."Liberum cut its price target on Flybe to 33p from 43p as it downgraded its forecasts following the update, and maintained its 'hold' recommendation."We continue to see turnaround potential at Flybe as it brings capacity into line with potential profitable demand. There remain self-help opportunities to continue to improve revenue per seat, such as new commercial systems, and non-fuel unit costs ought to be brought under better control, helped by cheaper aircraft leases, even with the headwind of seat capacity reductions."However, it is clear that external industry-wide headwinds from weaker demand and a more challenging environment on fuel and FX continue to more than offset management's actions. It is unclear when the balance will become more favourable."At 0822 BST, the shares were down 31% to 22.20p.