Ryanair downgrades profit guidance after slump in winter fares
StockMarketWire.com - Ryanair downgraded its full year profit guidance due to a fall in winter ticket prices.
Net profit for the year through March was now expected at between €1.0bn and €1.1bn, down from previous guidance of between €1.1bn and €1.2bn.
Winter fares were expected to fall 7%, worse than previous guidance of a 2% decline.
The downgrade came despite the budget carrier forecasting passenger growth of 9% to 142m , higher than previous guidance of 141m, and a slightly better-than-expected cost performance.
'While we are disappointed at this slightly lower full year guidance, the fact that it is the direct result of lower than expected second-half air fares, offset by stronger than expected traffic growth, a better than expected performance on unit cost and ancillary sales is positive for the medium term,' chief executive Michael O'Leary 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.'
'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.'
O'Leary said Ryanair couldn't rule out further cuts to airfares and slightly lower guidance in the fourth quarter if there were unexpected Brexit or security developments.
'As we are in a closed period, we will update shareholders in detail on these developments following our third-quarter results release on 4 February,' he added.
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