Ryanair profits fall as fairs dip

Company - Mohit Shah - Feb 06,2017

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ryanair profits fall as fairs dip

Ryanair announced that its average fares dropped faster than "initially planned" in the concluding three months of last year, while profits for the airline also deteriorated.

It was revealed that average fares dropped 17%, whereas profits slid 8% to 95m euros (£82m) as the slump in the value of pound also hampered the airline's results.

Ryanair's average fares were noted to be 33 euros (£28) per passenger during the period of October-to-December, the third quarter of its financial year.

The firm said it was increasing capacity and linking new routes and bases at a time when other carriers were also adding capacity.

Ryanair added that hesitation following the Brexit vote, weaker sterling and the switch of charter capacity from Egypt, Turkey and North Africa into Portugal and Spain, would last to put “downward pressure on pricing” for the remainder of this year and next.

The airlines expect yields in the fourth quarter to be down by 15%. Also, Ryanair said, in the next financial year it seemed visible that pricing will continue to be challenging and the company will respond to these hostile market conditions with solid traffic growth and lower unit costs.

Ryanair chief financial officer Neil Sorahan commented regarding the plans of the carrier post-Brexit. He said while the carrier expected to grow in the UK, but it has been quite clear that as the Brexit dates are drawing closer, the growth wouldn’t be as quick in the UK as it was supposed to be.

According to senior market analyst Neil Wilson, "Ryanair's trouble is that it has huge exposure to the UK market and sterling, but earnings are booked in euros.” He further added the airline develops about a quarter of its earnings in pounds so the fall in sterling explains a good deal of the drop in profits.