Ryanair has admitted it could miss its profits target for the current financial due to lower fares and yields during the autumn.
The company said in an announcement to investors that it was expecting net profits to be at the “lower end” of its previous forecast of between €570 million to €600 million for its financial year running to March 2014.
“However if fares and yields continue to weaken over the coming winter there can be no guarantee that the full year outturn may not finish at or slightly below the lower end of this range,” said Ryanair in a statement.
The surprise announcement sent Ryanair’s shares tumbling by as much as 15 per cent in early trading from yesterday’s close of €6.79 per share to €5.77.
Chief executive Michael O’Leary (pictured) said that bookings had been adversely affected by July’s heatwave across northern Europe but had returned to “some normality” in August.
“However in recent weeks we have noticed a perceptible dip in forward fares and yields into September, October and November,” added O’Leary.
“We believe this is due to a combination of factors: increased price competition and some capacity increases in the UK, Scandinavia, Spanish and Irish markets, the continuing effect of austerity and weak economic conditions across Europe, and weaker sterling/euro exchange rates.”
O’Leary said that Ryanair would be “selectively reducing our winter season capacity” with traffic targets being trimmed from 81.5 million passengers to “just under 81 million” for the current year.
“We are also rolling out a range of lower fares and aggressive seat sales particularly in those markets mainly UK, Scandinavia, Spain and Ireland,” he added.
Ryanair made a post-tax profit of €569.3 million during the 2012/13 financial year.