Low-cost airline Ryanair warned its profits will be hammered this winter by downward pressure on fares.
The Dublin-based carrier expects a 9% drop in average fares for the current quarter and a possible decline of 10% in the three months after Christmas.
Issuing its second profits warning in as many months, Ryanair said its surplus for the year to March 31 may dip to as low as €500m, from the €569m achieved a year earlier.
For the period to September 30 – a period when airlines make most of their money – Ryanair recorded profits growth of 1% to €602m.
Average fares fell by 2% in the half year, although revenues from areas such as the roll out of reserved seating, priority boarding and higher credit debit card fees grew by 22% to €713m.
The airline also announced it will move to fully allocated seating on all Ryanair flights from February. Passengers who do not pay €5 to select their seats will be allocated them during the 24 hours prior to the date of departure. It said the policy was in response to customer feedback.
Ryanair’s CEO, Michael O’Leary, said: "We are pleased to report slightly increased H1 profits, particularly against a backdrop of softer fares this summer. Yields in Q3 have softened, which is good news for our customers and has led to strong growth in traffic and load factors.
"The 2% fall in fares during H1 was impacted by one-off events such as the timing of Easter (not in Q1), the summer heatwave in northern Europe, French ATC strikes in June, and weaker sterling.
"Ryanair has responded to these market conditions by stimulating traffic growth with aggressive fare promotions. While fares are falling, ancillary revenues grew strongly by 22% to €713m, driven by the successful roll out of reserved seating, priority boarding and higher credit/debit card fees."