Shares in regional carrier Flybe sank in value this morning despite the airline reporting an improvement in trading.
The share price was down 23% to around 69.50p on the back of a third quarter trading update issued to the markets.
Flybe said the three months to the end of December had seen improvements in its core business and that it will continue to fine-tune new routes and compete aggressively for customers.
The airline saw a 2.4% growth in passenger revenue per seat to £50.23 in the quarter and a 5.5 percentage point increase in load factor to 74.3%.
This was driven by a 5.2% reduction in passenger yield to £67.65. The airline also saw a 6.1% reduction in seat capacity to 2.5 million seats in the quarter.
However, Flybe said hedging means it will see minimal impact of the reduction in fuel prices and the strengthening US dollar in 2015 or in 2016.
The airline said: “At group level, total group cost (excluding surplus capacity and USD loan revaluations) reduced by 4.7% to £133.7 million.”
Flybe said its forward booking profile for the fourth quarter shows seat capacity of 2.6 million, up by 14% year on year, and 36% of seats sold as at January 20 versus 34% the previous year.
Chief executive Saad Hammad said: “Flybe’s improvement in its core UK business continues to progress. “Only a year into our three year transformation we now have a platform which enables us to compete in a tough environment where the consumer demands value.
“We have responded to that by keeping our fares low and launching new routes.
“Having removed nearly a $1bn of future liabilities over the course of this year in relation to the firm legacy order for additional Embraer E175 aircraft and ongoing losses of Flybe Finland, we are making solid progress towards finding a solution to our remaining legacy issue, Project Blackbird.
“We are now well positioned to continue our positive momentum towards delivering sustained profitability and value to shareholders.”