Flybe today warned that consumer uncertainty over Brexit and repeated terrorist incidents could have a “materially adverse” impact on the airline.
The regional carrier’s boss Saad Hammad said it was facing “significant external challenges” with an uncertain outlook.
Full year profits will be hit by £2.5 million due to the impact of a stronger US dollar since the referendum vote.
Passenger yield, load factor and revenue per seat all declined in the three months to June 30 despite a 9.2% year-on-year rise in passengers to 2.3 million. Total revenue rose by 8.8% to £166.5 million, helped by a rise in contract flying.
Current trading shows that 48% of seats for the year have been sold, down from 51% at the same time in 2015 with a 5% drop in yield and an 11% decline in revenue per seat.
The airline said: “In the near term consumer uncertainty about Brexit, its economic impact and repeated terrorist incidents could have a materially adverse impact on Flybe.
“Travel demand may weaken further if consumer and business confidence suffers, not least against a weaker pound.”
Addressing the impact of the Brexit vote, Flybe said in a trading update: “In the long run, Flybe’s mission is unlikely to be affected in a significant manner by the form of the UK’s new arrangements with the EU.
“The UK remains geographically part of Europe with continuing important cultural, social and economic links with the mainland.
“Flybe connects regional communities increasingly underserved by other airlines and alternative modes of transport, fulfilling a vital social and economic need, independent of political arrangements.”
Hammad said: “Flybe continues to make progress despite significant external challenges. We delivered a solid quarter through vigorous commercial execution and enhanced operational delivery.
“The current outlook is very uncertain and we have limited forward visibility due to our late booking profile.
“We are yet to see the full impact on demand of the devaluation of sterling and the heightened consumer uncertainty after the Brexit vote. It is also too early to assess the potential demand impact of recent terrorist attacks.”
He added that the airline was continuing to take action to reduce unit costs and moderate its capacity growth, including the cancellation of a deal to lease nine additional aircraft
“While we currently face significant external risks, we have a strong balance sheet and cash position as well as a disciplined and resilient organisation to take us forward,” Hammad said.