Shares of Northern Ireland's biggest airline Flybe plunged 21.5% after it warned of a 'significant shortfall' on third quarter revenue expectations this year.
The group said demand for travel in its main UK market is deteriorating and the group blamed particularly poor sales in December for the shortfall in third quarter sales expectations.
UK domestic air travel, which represents around 70% of Flybe UK activity, continued to deteriorate, from an underlying 6% decline in the first half to an 8% drop by the end of the third quarter.
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"It is not expected that the Q3 2011/12 shortfall in revenue will be recovered during the remainder of the 2011/12 financial year. Based on latest sales trends, we believe that challenging market conditions will continue for the rest of the financial year to 31 March 2012," Flybe said in a company statement.
The group added that it has maintained its yields at last year's levels, rather than increasing them as previously planned, thereby maintaining volumes and growing market share.
Commenting on the decision to not push through fare price increases, chairman and chief executive officer Jim French said, "The UK domestic market is clearly challenging. Under such circumstances, notwithstanding the shortfall against our revenue expectations, I believe that maintaining volumes and growing market share at the expense of planned yield increases was the correct decision to protect the long term potential of Flybe."
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