1205 Wednesday 14 November 2018

Equity trading in October was a turbulent time for many stocks, but few saw the losses incurred by low cost UK airline Flybe. Following a loss in valuation of over 60% in the last month, Flybe has today announced their decision to sell up.

After the company issued a profit warning on 17th October, FLYB.L instantly dropped nearly 30%. The company had cited lack of demand, higher fuel costs and a weaker GBP for their pessimistic outlook and its stock price hasn’t been able to bounce back. Despite cutting their fleet size and reducing costs before the profit warning, their forecasted pre-tax loss of £22m far overshadowed the previous market estimate of a £3.5m loss.

Investors interested in the domestic airline sector have seen stock such as easyJet and Wizz Air outperform the FTSE by high margins over the last month, but Flybe has been a disaster compared in comparison.

The decision to sell the company will have come at the frustration of British infrastructure and company Stobart after they saw a bid to buy Flybe back in March, however they may now come back in with a revised bid, potentially lower than they had previously offered.

The company are however still looking into options that would prevent an outright sale of the company and this may include further cost cutting and downgrading on their LSE listing in order to allow more freedom and flexibility for divestment.

As always, to get further analysis on Flybe or the aviation sector in general, please feel free to contact a broker directly on 0121 454 0770.

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