18th Jan 2019 07:18
LONDON (Alliance News) - Budget airline Ryanair Holdings PLC on Thursday reduced its profit guidance, blaming lower fares over the winter period.
For its financial year ending March, Ryanair is guiding for profit after tax between EUR1.0 billion and EUR1.1 billion. Its prior guidance range was EUR1.1 billion to EUR1.2 billion.
Profit after tax in its previous financial year was EUR1.5 billion, meaning profit will be down as much as 50% in financial 2019. The previous year's figure had been up 10% on financial 2017.
Winter fares are expected to fall 7%, Ryanair said, compared to prior guidance of 2%.
However, the company did guide 9% growth in traffic to 142 million passengers in the current year, stronger ancillary sales, and a "slightly" better second-half unit cost performance so far.
Profit guidance excludes expected EUR140 million start-up losses from Austrian budget carrier Lauda.
Chief Executive Michael O'Leary said: "While we are disappointed at this slightly lower full year guidance, the fact 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.
"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," he continued.
"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 also said though there is "reasonable" visibility for fourth-quarter bookings, Ryanair cannot rule out further cuts to air fares or another cut to guidance "if there are unexpected Brexit or security developments".
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