Ryanair
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- Date Submitted: 09/26/2013 10:16 AM
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Ryanair warns that profits may miss forecast
Ryanair has warned that profits this year may miss its forecast.
Europe's biggest low-cost carrier says that profits may miss or be at the lower end of its range of 570m to 600m euros (£480m to £508m).
Ryanair said there had been a dip in ticket prices and booking levels for September, October and November.
Its shares closed down 11% on the news and other airline shares were hit too, with Easyjet falling 5% but British Airways owner IAG Group down only 1.3%.
Lower fares
Ryanair says the weakness of European economies is partly to blame as well as price cutting by rival airlines.
In a conference call chief executive Michael O'Leary said: "We are going to respond to this by being out there first and being aggressive in fare response".
He said that Ryanair will offer its £14.99 one way fare on up to 1,000 routes in September, October and November. That is up from 600 routes over the summer.
It is also launching an advertising campaign in the Republic of Ireland and the UK.
Investor surprise
Mr O'Leary said the weakness of the pound was hurting profits as 25% of the airline's sales are made in sterling.
"This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Donal O'Neill, analyst with Goodbody stockbrokers.
To compensate for the weak demand, Ryanair will ground 70 to 80 aircraft during the winter months, after initially expecting to ground just 50.
That should mean its annual seat capacity will be 81 million seats, still up 2-3% on last year.
Ryanair has warned that profits this year may miss its forecast.
Europe's biggest low-cost carrier says that profits may miss or be at the lower end of its range of 570m to 600m euros (£480m to £508m).
Ryanair said there had been a dip in ticket prices and booking levels for September, October and November.
Its shares closed down 11% on the news and other airline shares were hit too, with Easyjet falling 5% but British Airways owner IAG Group down only 1.3%.
Lower fares
Ryanair says the weakness of European economies is partly to blame as well as price cutting by rival airlines.
In a conference call chief executive Michael O'Leary said: "We are going to respond to this by being out there first and being aggressive in fare response".
He said that Ryanair will offer its £14.99 one way fare on up to 1,000 routes in September, October and November. That is up from 600 routes over the summer.
It is also launching an advertising campaign in the Republic of Ireland and the UK.
Investor surprise
Mr O'Leary said the weakness of the pound was hurting profits as 25% of the airline's sales are made in sterling.
"This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Donal O'Neill, analyst with Goodbody stockbrokers.
To compensate for the weak demand, Ryanair will ground 70 to 80 aircraft during the winter months, after initially expecting to ground just 50.
That should mean its annual seat capacity will be 81 million seats, still up 2-3% on last year.