Flybe grounded by slump in UK demand

Flybe's shares slumped by 36 per cent last night after Europe's biggest regional carrier warned of the impact of a recent but "significant slowdown" in sales in the UK.

The airline, which made its debut on the London Stock Exchange at the end of last year, said the weakness in sales meant that its revenues in the six-month period to the end ofSeptember would now be 1 per cent lower than what its management had expected. Costs, however, had been in line with hopes, it added.

"In line with many other consumer facing businesses, we noted in September a significant slowdown in sales across our UK domestic network," the company said, adding that it was too early to tell whether the slowdown "is a short-term reaction to the turbulent macroeconomic environment or whether this is a longer-term market adjustment".

The subsequent sell-off pushed its shares further below its initial IPO offer price of 295p apiece. Last night, after falling by 36.5p during the course of the day, Flybe shares closed at 65p, valuing the Exeter-based business at just under £49m.

"The recent slowdown in sales on our UK domestic routes is obviously a development we are closely monitoring," the airline's chairman and chief executive Jim French said.