Performance to offset lower fares

Fares fall as sterling plunge hits Ryanair profits

Michael O'Leary sky vidRyanair has today issued a profits warning as a result of sterling’s plunge in value.

It says the fall in the pound, which accounts for a quarter of full year business, will see fares fall by between 13% and 15%, higher than previously forecast.

The Irish airline now expects full year net profit to be 5% lower, falling from a previous range of €1.375bn – €1.425bn to a new range of €1.30bn – €1.35bn.

“The primary cause of this slightly lower growth in full year profitability is the 18% fall of Sterling post Brexit which will reduce H2 average fares by between 13% to 15% as opposed to the previously guided 10% to 12%,” it said in a statement to the London Stock Exchange. 

Ryanair confirmed that its H1 fares were marginally weaker, down 10% compared to previously guided 9%.

However, these lower fares will be partly offset by a better than expected cost performance.

Ryanair now expects full year ex-fuel unit costs to decline by 3% compared to previously guided 1%. It also expects full year load factor to be 1% better than guided at 94%, and now expects that full year traffic will increase to 119m, which is 12% growth on last year’s 106m customers.

Chief executive Michael O’Leary (pictured) said: “The recent sharp decline in sterling post Brexit (which accounts for approx. 26% of Ryanair’s FY17 revenues) will weaken H2 yields by slightly more than we had originally expected.

“While higher load factors, stronger traffic growth and better cost control will help to ameliorate these weaker revenues, it is prudent now to adjust full year guidance which will rise by approx. 7% (over FY 2016) rather than our original guidance of 12%. This decline is primarily due to the impact of weaker Sterling on our H2 fares.

“We would caution that this revised guidance remains heavily dependent upon no further weakness in H2 fares (-13% to -15%) or Sterling from its current levels.”

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.