Ryanair profits down as fares slide
Ryanair is warning that a period of ‘attritional fare wars’ will hit airline profits in the next year or two.
Chief executive Michael O’Leary said shareholders should expect this kind of environment as the group reported a 30% fall in pre-tax profits for year to March 31 to €1.1 billion.
O’Leary said fares were currently ‘artificially low’ but as weaker airlines fail or get bought out, a handful of major players would emerge and fares will start to rise again.
Ryanair’s average fares in the last financial year fell by 6% to €37 while passenger numbers rose 7% to 139.1 million passengers.
In a video presentation, O’Leary said its two main markets – UK and Germany – had been impacted.
He said UK customers are booking later, due to Brexit uncertainty, which is forcing the airline to reduce fares to stimulate bookings.
It said its German sales have been hit by over capacity.
Looking forward to the next financial year, Ryanair said its outlook remains cautious on pricing.
Assuming revenue growth of 3%, Ryanair said it is forecasting ‘broadly flat group profits’ between €750 million and €950 million.
It expects traffic will grow by 8% to 153 million but fares will continue to be lower.
"This guidance is heavily dependent on close-in peak summer fares, second half prices, the absence of security events, and no negative Brexit developments."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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