Ryanair, Europe's biggest budget airline, undershot analyst forecasts with a profit slide of 29 per cent in the three months to June as it grappled with a toxic mix of austerity, recession and stubbornly high fuel prices.
The Dublin-based airline said the weak economic outlook for Europe would continue to restrain fare growth for the rest of the year, but maintained its forecast of a profit of between €400m (£312.7m) and €440m for the year to March.
"Austerity is biting. There is just less money around," said chief financial officer Howard Millar. "There are no particular bright or black spots."
Net profit for three months to June was €99, compared with a forecast of €123m by four analysts polled by Thomson Reuters. Earnings per share were 6.9 euro cent in the quarter, compared to an average analyst forecast of 9 cents.
The airline, which has a lower cost base than many of its competitors, said it had hedged 90 per cent of its fuel needs for the year to March at approximately $1,000 per tonne, up 21 per cent on last year.
But it said the fuel price savings would be more than offset by a lower euro to dollar exchange rate.
Average fares were up 4 per cent, in line with mid-single digit growth forecast by the airline in May, and were on track for average growth of around 3 per cent in the year to March, Millar said.
The airline does not expect to change plans to ground 80 of its 270 planes over the winter due to high fuel costs, Millar said.
"With oil prices at $100 per barrel it really doesn't makes sense to fly these aircraft," Millar said. "The more you fly, the more you lose."