Ryanair pledges to continue cutting fares at the expense of yearly profits

BUDGET airline Ryanair saw its shares slump eight per cent yesterday after it told the market it would continue to slash fares to win passengers during the downturn.<br /><br />The Irish carrier also said its net profits in the first quarter rose sixfold to &euro;136.5m (&pound;100m), thanks to falling oil costs, and that it expected passenger numbers to rise to 67m people this year.<br /><br />But it warned that full-year profits would likely be at the lower end of forecasts, which stand between &euro;200m and &euro;300m. It also said the drop in full-year passenger yield will be worse than the 20 per cent drop previously estimated.<br /><br />The airline&rsquo;s stock fell 8.3 per cent to &euro;3.10 on the announcement. <br /><br />Ryanair said that it had slashed fares by an average of 13 per cent for the first three months of the financial year, resulting in passenger numbers increasing 11 per cent to 16.6m. <br /><br />Cutting fares to keep up the competitive edge reduces the amount that Ryanair earns on each seat.<br /><br />&ldquo;We will continue to expand as others fail,&rdquo; chief executive Michael O&rsquo;Leary said.