By Esha Vaish
(Reuters) - British budget airline Flybe Group Plc (L:FLYB) swung to a pretax loss in the first half, hurt by one-off costs and a charge related to its exit from its Finland joint venture.
Flybe's stock fell as much as 23 percent to 102 pence, making it one of the top percentage losers on the London Stock Exchange.
The carrier posted a pretax loss of 15.3 million pounds in the six months ended Sept. 30, compared with a profit of 13.8 million pounds a year earlier.
Flybe was hurt by an increased flight delay claims provision, external costs related to surplus capacity and revaluation of U.S. dollar aircraft loans.
The company booked an impairment charge related to the sale of its 60 percent stake in loss-making Flybe Finland to partner Finnair (HE:FIA1S).
Citing slower capacity growth and higher market costs, Liberum analyst Gerald Khoo cut his full-year forecast to a "small pre-tax loss".
The embattled carrier had only just returned to profitability last year, helped by brutal cost-cutting that involved giving up airport slots, slashing jobs, exiting unprofitable flight routes and grounding surplus fleet.
However, new EU 261 flight delay compensation regulations that dictate procedure in events of denied boarding, flight cancellations, or long delays of flights, forced the company to record a 6 million pound provision in the first half.
Chief Executive Saad Hammad called the rules "unfortunate" and "discriminatory", as, in terms of fares, on most of the routes Flybe operated it mainly competed with rail roads and ferry operators who do not have compensation regimes.
"It's unfortunate because (compensation for) any delay of three hours or more is more than three times the average ticket price of Flybe," Hammad told journalists on a call. Flybe pegs its average ticket price at less than 85 euros ($106).
Numis analysts said the law would have a negative cost implication for all airlines and tour operators, which might tempt them to increase fares for passengers.
They said given that the estimated provision amount would be roughly 0.5 percent of Flybe's full-year turnover, larger rival easyJet Plc's (L:EZJ) full-year pretax profit could take a hit of about 4 percent. easyJet is to report on Nov. 18.
(Reporting by Esha Vaish in Bangalore; Editing by Maju Samuel)