Published: Tue, February 07, 2017
Economy | By Melissa Porter

Ryanair profits drop on Sterling slump

Ryanair has said its average fares fell faster than "initially planned" in the final three months of previous year, while profits at the airline also declined.

Third quarter unit costs were cut by 12 per cent, while ex-fuel unit costs were down six per cent.

Asked about the carrier's plans post-Brexit, Mr Sorahan said that while the airline expected to expand in the United Kingdom, "we have been quite clear that as we move closer to Brexit... that we won't grow as quickly in the United Kingdom as we might otherwise have done". Revenue was up 1%, at €1.35 million.

Continued Brexit uncertainty today prompted Ryanair to present a "cautious" outlook for the remainder of FY17, hot on the heels of low-priced rival EasyJet's January warning that its pre-tax profit for the year will take a heavy hit as a result of the weakness of the pound.

Ryanair noted that it returned EUR311.0 million to shareholders in the third quarter, as part of its ongoing EUR550.0 million share buyback.

A shift in popular tourism hot spots due to political instability in Turkey, Egypt and North Africa has also weighed on fares.

"Pricing will continue to be challenging; and we will respond to adverse market conditions with strong traffic growth and lower unit costs, Chief Executive Michael O'Leary said".

"Our headline case is that we don't expect to grow as quickly in the United Kingdom as we would otherwise have done on the fault of Brexit - because there (are) too many uncertainties there", said Chief Financial Officer Neil Sorahan at a press conference in central London. "With less than two months of the [financial] year to go, and no Easter in March, we expect fourth quarter yields to decline by as much as 15%", the LCC said. The airline added that its full-year guidance depended heavily on no further terrorist incidents in Europe causing a drop in close-in bookings.

Currency volatility involving the pound will also persist.

"The Q3 results came in marginally light of our forecasts and consensus.However, we expect Ryanair's peers to face greater pressure given their narrower margins", said Liberium analyst Gerald Khoo, adding that he expected no change in analysts' consensus forecasts for Ryanair's full-year profit. Non-fuel costs were down 6%, while fuel costs fell 20% per passenger in 3Q.

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