Shares in budget airline Ryanair are down eight per cent this morning after it downgraded its full-year profit guidance by 12 per cent following a series of summer strikes by pilots and cabin crew.
Chief executive Michael O'Leary blamed the downgrade on lower passenger traffic and forward bookings made because of the strikes. It now expects to make between €1.1bn (£980m) and €1.2bn (£1.07bn), following a previous profit forecast of between €1.25bn and €1.35bn.
“While we successfully managed five strikes by 25 per cent of our Irish pilots this summer, two recent coordinated strikes by cabin crew and pilots across five EU countries has affected passenger numbers (through flight cancellations), close in bookings and yields (as we re-accommodate disrupted passengers), and forward air fares into the third quarter," he said.
"While we regret these disruptions, we have on both strike days operated over 90 per cent of our schedule. However, customer confidence, forward bookings and third quarter fares have been affected, most notably over the October school mid-terms and Christmas, in those five countries where unnecessary strikes have been repeated."
Last Friday, cabin crew members from the Netherlands, Belgium, Spain, Portugal and Italy went on strike over pay and working conditions. Among the list of demands from the cabin crew is that they be moved over to local employment contracts from their current contracts, which are based in Ireland.
In this morning's trading update Ryanair also said it wold be cutting winter capacity by one per cent because of the "lower fare, higher oil" environment. It also cited a "higher EU261 environment", the mechanism by which customers apply for compensation.
The airline said it would not be able to rule out further disruption in the next quarter, and that profit guidance could be cut further.
O'Leary said recently that the airline would put up with strikes to defend its low-cost business model.
Fiona Cincotta, analyst at City Index, said budget airlines were all having a tough time.
She said: "Most of the budget airlines are facing the same pressures and are seeing investors walk away from their shares.
"Even EasyJet which managed to pick up additional passengers from Ryanair’s cancelled flights lost 5.25% on the day.
"British Airways parent International Consolidated Airlines also saw shares decline but at a more moderate scale."