Ryanair issues second profit warning

Dino D'Amore
By Dino D'Amore November 4, 2013 11:28

Ryanair issues second profit warning

Ryanair has issued its second profit warning to reduce its full year profit guidance from €570 million to €510 million. The budget airline has blamed a fall in fares for the decline, since fares have fallen by 2% in the six months to September 2013. Ryanair has blamed factors from the summer heatwave in northern Europe to French air traffic control strikes in June, and weaker sterling.

“The continuing fare and yield softness means that full year profits will be lower than previously guided (€570m to €600m). We now expect the full year outturn to be between €500m to €520m due entirely to this lower fare environment,” the company said.

Still the cost savvy airline is making cuts to help offset the decline in yields – passenger costs are expected to fall by 7% in the second half of the year and Ryanair already has a significantly lower fuel hedged position in place for 2015 to help lower costs by 4%. Ryanair is 90% hedged for 2014 at $980 per tonne ($98 pbl), and has extended its 2015 hedges to 60% at $94 pbl.

Although Ryanair expects fares to fall by 9% in Q3 and by 10% in Q4, it states that with its “175 new aircraft order, our new 10 year growth deals at London (STN) and Warsaw (MOD) airports, and the Irish Government’s recent decision to scrap the €3 travel tax from April 2014, Ryanair is well positioned to return to strong and profitable traffic growth from September 2014 onwards”.

Dino D'Amore
By Dino D'Amore November 4, 2013 11:28
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