Ryanair issues profit warning as fares fall

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Ryanair has cut its profit forecast blaming lower-than-expected air fares.

The airline’s chief executive, Michael O’Leary, said Ryanair could not rule out even lower fares, which are expected to fall 7% this winter.

He said the low fares were already causing problems for rivals, including Flybe which was rescued last week.

Full-year profits are now expected to be in a range of €1.0bn to €1.1bn (£880m to £970m), compared with its previous forecast of €1.1bn to €1.2bn.

The profit forecast has been cut despite Ryanair saying it expects to carry more travellers than forecast.

Mr O’Leary said there was too much capacity on short-haul routes in Europe this winter, adding that customers were 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,” he said.

Air fares had been expected to fall by 2%, rather than 7%.

More cuts could be coming, Mr O’Leary added.

“While we have reasonable visibility over forward bookings [for the fourth quarter], we cannot rule out further cuts to air fares and/or slightly lower full year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March,” he said.