Ryanair Profit Drops As It Lowers Fares
Ryanair's third quarter profit fell 8 percent as it dropped ticket prices to add market share.
In the quarter to December 31, net profit was EUR€95 million (USD$102 million), down from the previous year’s €103 million. The average fare fell by 17 percent to €33 (USD$35.40).
“Our fares this winter have fallen sharply as Ryanair continues to grow traffic and load factors strongly in many European markets. These falling yields were exacerbated by the sharp decline in Sterling following the Brexit vote,” chief executive Michael O’Leary said.
The number of passengers flown was up 16 percent to 29 million as the Irish airline added routes and bases. During the quarter it launched 95 new routes, opened five bases and added 10 Boeing 737-800s to its fleet.
Despite the capacity increase, Q3 load factor rose 2 percentage points to 95 percent. Unit costs were down 6 percent overall, or 12 percent if fuel is excluded.
Looking forward, Ryanair expects “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 FY18.”
Ryanair said it will open two new bases in March - Naples and Frankfurt - as it continues its move into major markets and away from regional, but lower cost, airports.
A new deal with London Stansted Airport will allow the addition of nine new routes and additional capacity on others. It is targeting 20 million passengers to fly on its Stansted services next year.