UK airline Flybe Group said it has reduced capacity and cut costs as weak demand, pricing pressures and rising competition from rail operators dented fourth-quarter revenue.
The airline connects UK regional airports to London and other European cities.
It said today it expects to report an adjusted loss before tax for the year to March 2017 due to a charge of £5-10m for a systems upgrade.
Analaysts had expected a pre-tax profit forecast of £4.2m and they now estimate a loss of £3.8m.
The airline said that summer trading this year is in line with its expectations.
It forecast an 11% increase in revenue in the first half of 2017-2018 and a 6% rise in yield, helped by the timing of the Easter holiday, which is later than last year.
In the quarter up to March 2017, it estimated passenger revenue rose by 9.8%, compared with 13.5% in the previous quarter.
"The period has been characterised by weak demand in an uncertain consumer environment, together with price competition arising from overcapacity amongst airlines and sharpened price activity from rail operators," Flybe said.
European airlines have driven down fares by adding more seats to boost their market share in a period of low oil prices.
Flybe said operational cancellations, industrial action mainly by French air traffic controllers and some weather-related cancellations also hit revenue in its fourth quarter.
It said it expects its load factor to fall by around 1.4 percentage points in the three months to March 31, an improvement on the 1.7 percentage point fall in the previous quarter.
Flybe also estimated slower year-on-year seat capacity growth of 10% for the fourth quarter from 12.7% in the third quarter.
It also said it expected a 3% rise in capacity for the first half of this year as the fleet size peaks.
Flybe has taken delivery of nine Q400 aircraft in the year, and expects to reach fleet size peak next month with a total of 85 aircraft.
