Ryanair today disclosed a weakening in prospects for the autumn and said its annual profit may be at the lower end of expectations.
Chief executive Michael O’Leary issued the caution in a trading update, saying the budget carrier now expects full-year profits to come in at around €570 million to €600 million.
A statement said: “However, if fares and yields continue to weaken over the coming winter there can be no guarantee that the full year outturn may not finish at or slightly below the lower end of this range.”
O’Leary said late bookings in July were hit by the heatwave in Northern Europe and weaker sterling/euro exchange rates.
“The close in booking pattern returned to some normality in August, which will ensure that our H1 guidance remains unchanged, which is for a small increase in H1 profits over the prior year H1 comparable,” he said.
“However, in recent weeks we have noticed a perceptible dip in forward fares and yields into September, October and November.”
He put this down to:
- Increased price competition and some capacity increases in the UK, Scandinavia, Spanish and Irish markets.
- The continuing effect of austerity and weak economic conditions across Europe.
- Weaker sterling/euro exchange rates.
Ryanair will react by selectively reducing its winter season capacity, cutting its full-year traffic target from over 81.5 million to just under 81 million.
“We are also rolling out a range of lower fares and aggressive seat sales particularly in those markets mainly UK, Scandinavia, Spain and Ireland,” added O’Leary.
“Ryanair remains confident that we will continue to hit our revised passenger targets albeit at lower fares and yields than originally expected.
“Accordingly, it is prudent to advise shareholders that our full year profit after tax guidance will now be at the lower end of our €570m to €600m range.”
O’Leary stressed that Ryanair’s cash flows and balance sheet remain in “rude good health”.