Europe fare war dents Ryanair’s profit forecasts

 
Marion Dakers

AIRLINE shares took a nosedive yesterday after Ryanair, the biggest carrier in Europe, warned that it might miss profit targets for the year.

The budget airline said a brewing price war in the UK and several other countries had dented its yields in recent weeks, as rivals try to tempt hard-up Europeans into taking more flights.

The effect was made worse by the weakness in sterling, which finance boss Howard Miller said could wipe €50m (£42.3m) from annual profits.

As a result, the Irish firm has told investors its full-year profit after tax is set to come in at the low end of its €570m to €600m range, having made €569m in the last financial year.

If fares continue to weaken over the winter, Ryanair said it might even miss its range altogether.

“I have no doubt that the market will be weaker than the industry is expecting over the next couple of months and we are going to respond to that by being out there first and being aggressive with pricing,” chief executive Michael O’Leary said.

The company said the lower guidance would not affect its plan to buy back at least €400m of its shares.

The news that the firm could miss targets came as a shock for investors in Ryanair, which last issued a profit warning in 2009.

Shares in the group fell 11.17 per cent to €6.03, the lowest closing price since mid-April. The news was enough to take other carriers down in Ryanair’s wake. EasyJet closed five per cent lower at 1,215p while British Airways owner IAG lost 1.26 per cent to 291p.