Friday 21 November 2014

Ryanair shares fall as airline slashes profit forecast on weak fares

Published 04/11/2013 | 07:05

Michael O'Leary, chief executive officer of Ryanair
Michael O'Leary, chief executive officer of Ryanair

RYANAIR annual profit is set to fall for the first time in five years as intense competition in Europe pushes average fares down by around 10pc over the winter months, Europe's largest airline said today.

Shares in the airline fell 12pc this morning following the news.

Two months after issuing its first profit warning in a decade, the carrier further cut its profit forecast for the year to March to €510m from 570m.

The airline met analyst forecasts with a profit of €602m for six months to September as a fall of 2pc in average fares was compensated by a 22pc rise in extra charges.

But the airline said it would be forced to hold further seat sales during the winter to keep planes full.

"The continuing fare and yield softness means that full year profits will be lower than previously guided," Chief Executive Michael O'Leary said in a statement.

And the airline is to introduce allocated seating from 1 February for all customers.

"Passengers will still be able to choose our popular reserved seating service (select front row or over-wing seats), or alternatively select seats elsewhere on the aircraft, as long as they check-in more than 24 hours prior to the date of departure," it said. 

"All passengers who don’t wish to pay a small fee (€5) to select their preferred seats will be allocated seats during the 24 hours prior to the date of scheduled departure. 

"This return to allocated seating is Ryanair’s response to the enormous demand from our customers in recent weeks via Ryanair’s “Tell MOL” customer feedback initiative." 

Ryanair recently introduced a number of changes including reserved seating, the halving of the cost of checking bags, the slashing the fee for reprinting boarding passes and allowing a small second carry-on bag for free.

It also rolled out a major overhaul of its website to cut pop-ups and a security puzzle that customers had to complete to prove they were not automated users trawling the site.

Mr O'Leary said today that pre-booked seats was a growth area for the airline.

"We are seeing this for about 49 seats in every plane," he added.

 

Reuters

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