May 30, 2017 / 8:50 AM / 2 months ago

CORRECTED-Ryanair posts record annual profit, says fare cuts to continue

3 Min Read

(Corrects to show operates in 34 countries, not 33, paragraph 6)

DUBLIN, May 30 (Reuters) - Ryanair reported record annual profit on Tuesday despite sharp falls in average fares due to overcapacity and Britain's vote to leave the European Union, and promised higher profits and lower fares next year.

Europe's largest carrier by passenger numbers, Ryanair said it earned net profit of 1.316 billion euros ($1.46 billion), at the lower end of its forecast range of 1.3 billion euros to 1.35 billion euros, but in line with analyst forecasts.

Ryanair cut an initial estimate of 1.375 billion euros to 1.425 billion euros in October by 5 percent due to sterling weakness in the wake of Britain's Brexit vote.

After years of falling ticket prices, European carriers in recent weeks have reported seeing signs of a turnaround as the decline in fares slows.

Ryanair said it expected its fares to fall by between 5 percent and 7 percent in the year to the end of March 2018, down from a fall of 13 percent in the year to end-March 2017.

Ryanair, which flies 1,800 daily flights across 34 countries, has used the low-fare environment to press home its cost advantage and increase capacity.

It flew 120 million passengers in the year to the end of March, up from an initial estimate of 116 million. Its target of 130 million passengers in the year to March 2018 implies growth of around 8 percent, down from 13 percent this year.

"We are pleased to report a 6 percent increase in profit after tax ... despite difficult trading conditions caused by a series of security events at European cities, a switch of charter capacity from North Africa, Turkey and Egypt to mainland Europe, and a sharp decline in Sterling following the June 2016 Brexit vote," Chief Executive Michael O'Leary said in a statement.

"Investors should be wary of the risk of negative Brexit developments, or any repeat of last year’s security events at European cities, which could damage consumer confidence, close-in bookings and this FY18 guidance," he said. ($1 = 0.8990 euros) (Reporting by Conor Humphries; Editing by Stephen Coates)

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