Ryanair forecast drop in profits for second time in just four months
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Ryanair forecast drop in profits for second time in just four months

RYANAIR has issued a profits warning for the second time in quick succession, blaming lower than expected winter fares.

The Irish budget airline blamed short-haul overcapacity in Europe for the drop in its annual profits forecast, the second such decrease in just four months.

The no-frills carrier, which remains the largest in Europe, said it expects profit after tax for its financial year up to March 31 of between €1 billion (£882m) and €1.1 billion (£970m), compared to its previous estimate of up to €1.2 billion (£1 billion).

Last year, Ryanair recorded profits of €1.45 billion (£1.2 billion) but cut its half-year forecast by 7% in October in the wake of a spate of crew strikes across the continent.

Winter fares this year are expected to fall by 7% rather than the previous estimate of 2%, the airline said.

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However, it does expect the number of passengers to rise 9% to around 142 million.

Disappointment

Ryanair CEO Michael O'Leary said he was "disappointed" by the profits revision and warned he could not rule out further cuts due to Brexit and security uncertainties.

"There is short haul over-capacity in Europe this winter, but Ryanair continues to pursue our price passive/load factor active strategy to the benefit of our customers who are enjoying record lower air fares," he said.

"While we have reasonable visibility over forward quarter four bookings, we cannot rule out further cuts to air fares and/or slightly lower full-year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March."

With intense competition across the continent pushing air fares lower, O'Leary also warned some airlines could be in trouble.

He added: "We believe this lower fare environment will continue to shake out more loss-making competitors, with WOW, Flybe, and reportedly Germania for example, all currently for sale."

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