Flybe In Trouble – Share Price Falls to 174p

Yes another travel company is feeling the pinch as more people opt for a staycation this year.

The airline announced that its business customers are providing a steady stream of revenue but the domestic and recreational flyers are just not booking. People are either staying at home or using the car.

Flybe only floated on the London stock exchange in December 2010. Rocketing fuel prices have also reduced its profits. It is having to add £3 to the cost of each flight to cover increased costs.

Recently Flybe was seriously thinking about selling of parts of its fleet to reduce costs and raise some additional revenue. However, it is expecting to make a profit of £22 million this year still.

Share Prices Fall By 20%

The news has caused a rash of sells resulting in Flybe share price dropping by 20%. On the day of the IPO on 10th December 2010 Flybe’s shared shot up by 8% to 320.5p after starting at 295p. The £60 million raised from the float was expected to be spent on a new fleet of planes.

The latest price for Flybe today (5/5/11) was 174.0p. It opened at 205p this morning.

BA owns 15% of Flybe, so this drop in share price could have a knock on effect. BA is another big share in many pension plans, much like BP. Flybe’s CEO also Jim French owns around 7% of the shares.

It seems to be a trend in the current economy that when times are hard airlines and travel firms are often hit the hardest the soonest. Something to consider when planning your portfolio.

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