Ryanair warns weak bookings to drag on profits

Reuters

DUBLIN (Reuters) - Ryanair (ISE:RY4B) could miss its full-year profit forecast as increased competition forces it to cut fares and capacity, while austerity measures in the euro zone and a weak sterling hit demand, Europe's biggest budget airline said on Wednesday.

The Irish group, which has routinely beaten profit forecasts in recent years, said it now expects its full-year net profit to be at the bottom end of its previously guided range of 570-600 million euros (482-508 million pounds).

"If fares and yields continue to weaken over the coming winter there can be no guarantee that the full year outturn may not finish at or slightly below the lower end of this range," it said in a statement.

The airline said in recent weeks it had noticed a "perceptible dip" in forward fares and yields in September, October and November, which it said had been impacted by increased price competition and increased capacity in the UK, Scandinavia, Spain and Ireland.

It said weak economic conditions in Europe and a weaker sterling were also having an impact.

"This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Donal O'Neill, analyst with Goodbody stockbrokers.

"The stock and sector will likely sell off heavily on the back of this news."

Ryanair will respond to weak forward bookings by cutting its capacity for the year to 81 million seats from 81.5 and by introducing "aggressive seat sales" particularly in the UK, Scandinavia, Spain and Ireland, the airline said.

It made no reference to recent media reports questioning the airline's safety record.

(Reporting by Conor Humphries. Editing by Jane Merriman and Mark Potter)

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