We’ve seen plenty of action in the aviation industry really. We’ve seen many airlines placed in financial difficulty, struggling either due to rising fuel prices, or falling flight costs to remain competitive. Just this month we’ve seen both Primera Air and Cobalt both cease operations. Air Belgium was reportedly considering taking the same action, while Jet Airways this week asked to stop repaying their loans. Now a profit warning issued by FlyBe has prompted aviation analysists to consider whether the airline could be the next airline to collapse.
What Is A Profit Warning?
According to Investopedia “Profit warning occurs when a company advises shareholders and the public that its earnings results will not meet analyst expectations. A company generally issues a profit warning prior to the public announcement of its official earnings results.”. Many people who have financial interests in FlyBe will be closely watching the airline’s results. This will come as a particular blow, to them, as they will suddenly need to assess their options. Following the profit warning announcement, there was a very clear drop in the company’s share prices. This saw a drop of 40% in one day from 32.20 to 20.20.
Should I Worry If I Have FlyBe Flights Booked?
At the moment it is hard to tell. FlyBe has struggled financially previously, however, the airline’s falling share price is rather alarming. The 40% drop in one day saw the airline’s share price reach its lowest of all time. If you currently have flights booked with FlyBe you could pursue a couple of options to make sure you’re covered “just in case”.
Travel insurance can be a fairly cheap way to stay protected. The important thing is to make sure that any travel insurance specifically covers airline insolvency, as many do not. In addition, it could be prudent to switch to another airline if this will not have a significant cost attached. Such an example could be if you have booked a flight with Avios, it shouldn’t be too difficult to switch to British Airways. Unfortunately, as the UK’s largest regional airline, Flybe currently offer many routes which are not available with other carriers.
Hopefully, FlyBe will be able to pull through despite the drastic drop in share prices. The airline’s full financial results will be available on the 14th of November. This will give the clearest view of what challenges face the struggling airline, and crucially, should indicate the cause of the profit warning. We will, of course, keep you up to date as the story evolves.
Do you think FlyBe will be the next airline to collapse? Let us know in the comments!