Ryanair: flights sold-out, profits dropped

Ryanair said its third-quarter net profit fell nearly 8% as overcapacity in the European airline industry continues to depress ticket prices.

Ryanair said net earnings fell to €95 million from €102.7 million a year earlier for the three months to the end of last year, owing to a sharp decline in the value of the pound after Britain's decision to leave the European Union.

“We expect sterling to remain volatile for some time and we may see a slowdown in economic growth in both the UK and Europe as we move closer to Brexit,” Ryanair said.

“While there may be opportunities to expand at certain UK airports… we expect to grow at a slower pace than previously planned in the UK and will continue to switch capacity into other key markets around Europe,” it added.

The Dublin-based airline said sales for the quarter barely rose, even as it carried 16% more passengers. Third-quarter sales of €1.35 billion were just 1% better than the year-earlier figure. Analysts expected Ryanair to deliver stronger sales and profit for the period.

"Pricing will continue to be challenging; and we will respond to adverse market conditions with strong traffic growth and lower unit costs, Chief Executive Michael O'Leary said.

A shift in popular tourism hot spots due to political instability in Turkey, Egypt and North Africa has also weighed on fares.

"We expect the uncertainty post Brexit, weaker Sterling and the switch of charter capacity from Turkey, Egypt and North Africa into Spain and Portugal will continue to put downward pressure on pricing for the remainder of this year" and into next fiscal year, Ryanair Chief Executive Officer Michael O'Leary said in a statement. "Our prices are falling faster than we initially planned," he added.

Ryanair said ticket prices in the fourth quarter are expected to fall as much as 15%. Still, the airline maintained its full-year guidance of profit between EUR1.3 billion to EUR1.35 billion. The carrier's view that ticket prices will remain weak through this year echoes sentiments of other carriers.

Ryanair wants the UK to remain in the EU’s open skies system, which allows any member-state registered airline to fly anywhere within the bloc, but has suggested that this may not be possible.
The airline had €576 million in net debt at the end of December after spending €1 billion on capital development, €800 million on share buy backs and €300 million on debt repayments.
“We plan to continue to manage our cash flow prudently and expect to have a modest net debt position at year-end,” Mr O’Leary said.