Ryanair issues profit warning as lower winter fares bite

Ryanair has warned over profits as the budget airline counts the cost of lower than expected airfares over winter amid over capacity in Europe.

The Irish carrier on Friday lowered its full-year post-tax profit guidance from between 1.1 billion euros (£966 million) and 1.2 billion euros (£1 billion) to a new range of one billion euros (£878 million) and 1.1 billion euros (£966 million).

Ryanair said that winter fares are expected to fall 7%, a much bigger drop than the previously guided fall of 2%.

Last year, Ryanair booked profit of 1.45 billion euros (£1.2 billion) and the downgrade represents the second warning in quick succession.

In October the airline said profits would be knocked a spate of crew strikes and rising fuel prices.

Ryanair boss Michael O’Leary also warned that he cannot rule out further downgrades to profit guidance.

He said: “There is short haul over-capacity in Europe this winter, but Ryanair continues to pursue our price passive/load factor active strategy to the benefit of our customers who are enjoying record lower air fares.

“While we have reasonable visibility over forward quarter four bookings, we cannot rule out further cuts to air fares and/or slightly lower full-year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March.”

However, the firm also expects stronger traffic growth of 9% to 142 million and stronger ancillary sales as more customers choose lower cost optional services.

Mr O’Leary also said that the competitive environment will “shake out” some of Ryanair’s rivals.

“We believe this lower fare environment will continue to shake out more loss making competitors, with Wow, Flybe, and reportedly Germania for example, all currently for sale,” he said.

Ryanair will release its third quarter results on February 4.