Flybe has posted a pre-tax loss of £19.9 million as overambitious plans for expansion in the past increased costs.
The regional airline saw revenues for the year to March 31 increase by 13.4 per cent to £707.4 million, but its near £20 million loss is down from a £2.7 million profit the previous year.
Flybe said it was going to reduce the size of its fleet after witnessing slower growth in consumer demand. Six Bombardier Q400 aircraft will be cut from the fleet next year.
An aggressive expansion plan increased capacity on the airline by 12.3 per cent to 12.7 million seats, but passenger traffic only increased 7.6 per cent to just under 9 million.
However, it said it was now “well placed” with better control over its capacity than previously.
CEO Christine Ourmieres-Widener said this would also allow Flybe to focus on more profitable routes as well as a greater focus on customer requirements.
The company said in a statement: "Despite the substantial progress in reducing the size of legacy fleet orders in 2015/16, Flybe has still seen significant capacity growth in a market where we witnessed slower growth in consumer demand.
"New routes and increased frequencies were targeted to cover marginal costs in the early years of operation, but do not contribute significantly to overall profitability.
"The capacity growth therefore had a negative effect on profitability."
It added: "We will make Flybe a sustainable business that operates the best routes and at the best times to suit the needs of our customers."
In addition to the over-capacity problems, a major IT upgrade hit profits by £4.8m last year and the company warned that an extra £6m would have to be spent cancelling costly contracts.
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