Ryanair issues profit warning as winter fares fall

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Budget airline Ryanair, Europe's biggest carrier by passengers, has warned its profits will be lower than expected - the second such downgrade in four months - because of weaker fares over the winter.

Profits for the year ending 31 March will be €100m (£88m) lower than previous expectations, at between €1bn to €1.1bn, the company said in a statement to the stock market.

Last year, the Dublin-headquartered group booked profit of €1.45bn and the downgrade represents the second warning in quick succession.

"While we have reasonable visibility over forward Q4 bookings, we can not 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", Mr O'Leary said in a statement.

The lower fares have, however, been partially offset by stronger than expected annual traffic growth - now expected to grow by 9% to 142 million passengers - slightly better than expected unit costs and stronger ancillary sales.

He said the fact that the airline was passing on lower air fares to customers would continue to be good for Ryanair's traffic growth and business over the medium to long term.

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The impact of these strikes was reflected in Ryanair's half-year results in October, when it reported a 7% fall in profits, although the airline was also affected by industrial action by air traffic controllers.

In addition, Ryanair's earnings have been hit by pan-European strikes previous year that forced it to cancel flights, affecting thousands of passengers, and offer improved pay deals to staff via landmark deals with unions.

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".

He added that the lower fare environment would continue to "shake out" loss-making competitors such as WOW, FlyBe, and Germania, all of which are now for sale.

O'Leary also said that the competitive environment will "shake out" some of Ryanair's rivals.

Ryanair said it could not rule out further price cuts and would update investors during the third quarter earnings report on February 4th.

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