Ryanair CEO Says Big Drop in Winter Fares Could Affect Full-Year Guidance
August 31 2016 - 7:50AM
Dow Jones News
LONDON—Ryanair Holdings PLC on Wednesday said a further
deterioration in fares during the winter period could threaten the
airline's full-year guidance after slightly higher passenger
numbers in the summer offset a sharper-than-expected drop in ticket
prices.
Europe's largest airline by passenger numbers last month
reaffirmed its earnings outlook for full-year profit in the range
of €1.375 billion euros ($1.53 billion) to €1.425 billion, though
it said it harbored risk. Ryanair expects to transport 117 million
passengers in the financial year ending March 31, up one million
from its initial projection.
Chief Executive Michael O'Leary warned, however, that if fares
in the October-through-March period fall more than the 10% to 12%
projected, the target could be at risk: "If it gets worse than that
we will have to adjust our full-year guidance."
Mr. O'Leary said fares in the April-through-September period are
down 9%, more than the 6% to 8% decline previously expected. Cost
savings and stronger traffic numbers are keeping the Dublin-based
airline on track to meet its profit target.
There is still much uncertainty over winter bookings, he
said.
Other European airlines have issued a profit warning in recent
months, blaming demand weakness from terrorism and the effect of
the British referendum in June to leave the European Union.
Ryanair on Wednesday said it planned to grow U.K. capacity next
year by around 6%, down from the 15% growth this year. Mr. O'Leary
said the drop was driven by the so-called Brexit decision.
The airline had planned to base 10 more planes in the U.K. next
year and now will position them elsewhere. Most of the capacity
will instead go into Germany, Poland, Italy, Spain and Portugal,
Mr. O'Leary said.
The Brexit vote has put into question traffic rights that
Ryanair and other European carriers use to fly freely across the
EU. Mr. O'Leary said issues that need to be resolved go beyond
traffic rights and include how to deal with British shareholders in
European companies. The EU requires its carriers to be
majority-owned by Europeans.
Mr. O'Leary said the airline should see further benefit from
lower fuel costs next year. The airline's fuel bill this year
should be €200 million below the prior year and fall another €150
million in the financial year starting April 1.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
August 31, 2016 08:35 ET (12:35 GMT)
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