Ryanair warns of further fares hike after 12pc 2011 increase
Budget airline Ryanair has warned that average air fares will hike by 12pc - fuelled by higher oil prices.
Despite the company posting a 26pc increase in pre-tax profits to €319m in the year ended March, fuel costs continue to pile pressure on Europe’s biggest airline.
The carrier, which prides itself on its cheap tickets, had already increased fares by 12pc in the year.
“Since we have limited visibility on bookings, we remain concerned at the impact of the recession, austerity measures, and falling consumer confidence on fares,” chief executive Michael O’Leary said.
“Despite these concerns we cautiously expect that our average fares will rise by up to 12pc this year due to a better mix of new routes and bases, slower traffic growth, and higher competitor fuel surcharges,” he added.
Shares in Ryanair fell the most in over a year and a half on news that the airline will ground 80 of 300 jets for the low season starting in October in a bid to cut costs further.
And even with the 12pc fare increase Mr O’Leary has forecast profits of no higher than last year’s – 18pc lower than what analysts had predicted.
“It’s the first time ever that we’ll go negative on traffic,” Mr O’Leary said.
“We take delivery of 50 aircraft this winter so instead of running around trying to open up new bases and routes in November and December we’ll sit them on the ground. With higher oil prices it makes no sense.”
He has also predicted that higher commodity prices will also lead to “more airlines going broke.”