Budget airline Flybe has issued a profit warning today, saying it expects to make a £12 million loss this year.

The group, which operates many flights out of Birmingham to locations such as Madrid, Amsterdam and Hamburg, said it had been hit by a fall in consumer demand.

The profit warning of a £12 million pre-tax loss for 2018/19 is still an improvement on the previous financial year when it posted a loss of £19.2 million.

This includes an estimated £29 million impact from weaker sterling, fuel and carbon prices.

In a statement to the stock exchange today, the airline said: "Flybe has seen good revenue performance in the first half set against the backdrop of increasingly adverse fuel and currency impacts.

"Recent trading however indicates a softening in the second half revenue outlook and the board now expects the full-year adjusted profit figure to be lower than market expectations."

Flybe has reduced capacity this year to focus on popular routes - increasing revenue per seat by 6.8 per cent and reducing capacity by ten per cent.

The statement added: "Consumer demand in domestic and near-continent markets has weakened in recent weeks and the board now expects this to continue into the second half.

"This together with higher fuel prices and weaker sterling will impact the expected H2 profit performance."

Flybe is warning of a £12m pre-tax loss
Flybe is warning of a £12m pre-tax loss

Chief executive Christine Ourmieres-Widener said: "We have made progress in driving our unit revenues across the summer but we are now seeing a softening in the market.

"We are reviewing further capacity and cost-saving measures while continuing to focus on delivering our 'Sustainable Business Improvement Plan'.

"Stronger cost discipline is starting to have a positive impact across the business but we aim to do more in the coming months...(and) remain confident our strategy will improve performance."