Jan. 10 (Bloomberg) -- Flybe Group Plc fell as much as 30 percent after Europe’s biggest regional airline said demand for travel in its main British market is deteriorating and that it had failed to push through planned fare increases.
U.K. domestic sales, which make up about 70 percent of Flybe’s revenue from the country, fell 8 percent in the third quarter ended Dec. 31, with sales last month “particularly disappointing,” the Exeter, England-based company said today.
Chief Executive Officer Jim French has responded to the decline by seeking to maintain market share rather than lift fares. French has said he’s seeking purchases and deals to provide flights for major European carriers seeking to exit regional routes requiring aircraft with fewer than 100 seats.
“All that people might see right now is disappointment, but once the market stabilizes it’s very exciting,” said Andrew Fitchie, an analyst at Investec Securities in London with a “hold” rating on the stock. “There is opportunity there in the medium to long term, but it’s going to be a bumpy ride.”
French said in a statement that it was “the correct decision to protect the long-term potential of Flybe” in securing market position at the expense of yield or fare increases. The company, already Britain’s biggest domestic carrier, boosted its share 2 percentage points, he said.
Flybe fell as much as 20.75 pence and was trading down 15.25 pence, or 22 percent, at 53.50 pence as of 8:27 a.m. in London, valuing it at 40.2 million pounds ($62 million).
The stock has tumbled 81 percent since debuting on the London Stock Exchange in December 2010.
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