Ryanair shares fall badly with no profits this year

Published on : Monday, November 4, 2013

RyanairWith Ryanair shares falling to 11% the company sent warning that profits will badly depreciate this year.

 

It now expects to make a profit of between 500m euros (£423m; $674m) and 520m euros for the financial year ending in March, down from its previous projection of 570m euros.

 

The airline said it expected fares to fall 10% over the winter months and was grounding aircraft as a result.

 

Ryanair will introduce allocated seating from next year February. Monday’s profit warning means that Ryanair will report its first fall in annual profits in five years. It also comes just two months after the company made its first profit warning in a decade.

 

Michael O’Leary, chief executive of Ryanair, said in a statement that Europe’s biggest discount airline said that fares had been falling because of increased price competition, softer economic conditions in Europe and the weaker euro-sterling exchange rate. The continuing fare and yield softness means that full-year profits will be lower than previously guided.

 

The warning came as the airline reported a net profit of 602m euros for the six months to the end of September, a rise of just 1% from a year earlier. It said it carried 49 million passengers during the period and generated revenue of 3.26bn euros, up 5% from the same period last year.

 

Since global economic downturn many consumers turn to more affordable travel options and Ryanair has enjoyed robust growth over the past few years. In the next 12 months there will be a brief pause in traffic growth.

 

Due to increased competition and weak conditions in key markets the airline is looking to focus on improving its service in an attempt to retain customers and attract new ones. Passengers will be allowed to select seats on aircraft, as long as they check in more than 24 hours before departure this plan will be introduce from 1 February next year. This will make boarding simpler and families can choose their seats together. The carrier has also introduced measures such as allowing a small second carry-on bag and a 24 hour “grace period” to allow passengers to correct minor booking errors, these popularise measures will definitely help to step up revenues for Ryanair.

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