The company says adjusted pre-tax profit is expected to be between £5m and £10m, down from £15.9m over the same period last year thanks to extra costs to improve the reliability of its aircraft.
Flybe is particularly focused on improving the Bombardier Q400 turboprop and is already flagging positive progress.
Unfortunately shares in the budget airline have tumbled 15.3% to 37.2p on the news.
Management are hoping to tackle higher costs through a review of the airline's maintenance strategy, which aims to boost aircraft performance and cut costs.
BROKER DOWNGRADES ON DISAPPOINTING UPDATE
Liberum’s Gerald Khoo has downgraded his recommendation from ‘buy’ to ‘hold,’ arguing clarity is needed on maintenance costs and further evidence of capacity cuts to support better unit revenue trends.
The analyst forecasts a £15m hit this year for higher maintenance costs, but concedes the improved reliability should reduce passenger compensation and other disruption charges.
Khoo says that Flybe has ‘recovery potential’ and is encouraged by the airline’s commercial performance, although this has been offset by the extra overheads.
Unfortunately many investors have heard this recovery story before - and been disappointed as turnaround efforts have stalled on one more than one occasion.
Numis analyst Kathryn Leonard is also cautious, placing her recommendation under review. She forecasts a loss before tax prior to IT write-off expenses of £10.2m in 2018 and £2.1m in 2019.
This is a significant drop from Leonard’s previous pre-tax profit expectations of £4.6m and £9.5m over the same period.
Earnings per share expectations were also changed with the analyst now anticipating a loss per share of 4.7p and 1p in 2018 and 2019, down from 2.1p and 4.4p earnings per share, respectively.