Over 50s travel and insurance firm Saga saw shares plummet by as much as 25% after it warned the collapse of airline Monarch had hit earnings and said efforts to attract new customers will see next year’s profits fall.
The group said Monarch’s demise in October, which saw holidays cancelled for around 860,000 people, had knocked its tour operations business, leaving it with a £2m (€2.26m) one-off hit.
Saga said this would now slow growth in underlying pre-tax profits to between 1% and 2% for the year to January 31, down from more than 5% in the first half.
There was further gloom for the new financial year as the group added that a plan to invest an extra £10m (€11.3m) a year into attracting new customers, alongside other "headwinds", would see underlying profits fall by around 5%.
Shares tanked on the news, falling as much as a quarter at one stage to hit their lowest level since its stock market flotation in May 2014.
Lance Batchelor, chief executive of Saga, insisted the group was right to maintain investment plans, despite recent "challenging trading conditions".
He added: "With greater customer insight and a stronger business platform, now is the right time for Saga to invest in growing the customer base and the business.
"We are confident that the actions taken will ultimately see a better quality of earnings and profit growth across the business."
As well as the Monarch blow, Saga also said its insurance arm suffered difficult trading in the home and travel divisions, with earned profit for retail broking expected to fall "marginally" over the current financial year.
It is offsetting some of the trading woes with cost cutting, with aims to save around £10m (€11.3m) next year.
But the firm said its marketing push would help holiday passengers and retail broking policy numbers return to growth.
It also stuck by its target to increase travel profits by up to five times by January 2022.