Ryanair profit warning after sharp drop in sterling
Ryanair has reduced its full year net profit guidance by 5%, blaming Brexit.
The airline is now expecting to achieve between €1.30bn and €1.35bn, compared to a previous range of €1.375bn to €1.425bn.
It said the main cause was the 18% drop in sterling after 52% of Brits voted to leave the European Union.
The pound fell below €1.10 for the first time since 2010 during trading on Monday.
Ryanair said the fall would reduce average fares by between 13% to 15% as opposed to the previously guided 10% to 12% in the second half of the financial year.
First half fares were marginally weaker, 10% down, compared to previously guided 9%, it explained.
"However, these lower fares will be partly offset by a better than expected cost performance," it said.
The airline now expects full year ex-fuel unit costs to drop by 3% compared to previously guided 1%.
It also expects full year load factor to be 1 percentage point better than guided at 94%, and now expects full year traffic will increase to 119 million – 12% up on last year’s 106 million passengers.
CEO Michael O’Leary said: "The recent sharp decline in Sterling post Brexit – which accounts for approximately 26% of Ryanair’s FY17 revenues – will weaken second half yields by slightly more than we had originally expected.
"We would caution that this revised guidance remains heavily dependent upon no further weakness in second half fares or sterling from its current levels."
He said Ryanair will continue to be ‘load factor active and price passive’ throughout the winter season.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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