Irish budget carrier Ryanair expects full-year net profits to be at the lower end of its €570-€600 million ($750-790 million) forecast range, citing recent weakness in yields on forward bookings and prompting it to trim its planned capacity this winter.
The carrier had already said yields on late bookings in July had been weaker than expected, citing the hot weather in northern Europe and the weaker sterling/euro exchange rates. "The close in booking pattern returned to some normality in August, which will ensure that our H1 guidance remains unchanged, which is for a small increase in H1 profits," says Ryanair chief executive Michael O'Leary in a trading update today.
"However in recent weeks we have noticed a perceptible dip in forward fares and yields into September, October and November," he adds. O'Leary says this reflects increased price competition and some capacity increases in the UK, Scandinavian, Spanish and Irish markets on top of weak economic conditions across Europe and the weaker sterling/euro exchange rates.
"We will respond to this lower yield outlook by selectively reducing our winter season capacity, thereby cutting our full year traffic target from over 81.5m to just under 81m," O'Leary says, adding it will also roll out a range of lower fares and aggressive seat sales.