The head of European no-frills airline Ryanair said on Thursday that while second-half 2004 revenues per passenger declined slightly less than expected, the overall outlook for 2005 was "awful."
Europe's biggest low-fare carrier in November revised its forecast for yields -- average revenues per passenger -- to a decline of 5 to 10 percent in the second half from a previous estimate of 10 to 20 percent.
"On Monday, we'll be updating that and it's a fraction better than that original guidance," Michael O'Leary said at an analyst conference in New York. "Why? Partially because the bloodbath is continuing in Europe."
"Some airlines are going bust, other airlines are pulling capacity out of markets where they compete with us," he said. "We're not finding the yield competition to be as bad as we originally thought it was."
But he reiterated that the outlook for 2005 was "awful." "Fares are going to get lower and lower," said O'Leary.
After making a name for itself by competing aggressively on short-haul routes between European countries, he said Ryanair is now eyeing some European airlines' home turf.
"At some point we will do domestic routes in Italy and other European countries," he said. "I think you'll see announced some domestic routes in Italy within the next one to two years."
A Ryanair-initiated dogfight would mean more bad news for beleaguered Italian state-controlled airline Alitalia, whose domestic flights are a key source of profit even as it struggles with competition on international routes.
In a talk characteristically spiced with humor and profanity, O'Leary also said Ryanair's experiment in offering in-flight entertainment has so far been "a bit disappointing."
The laptop-sized devices allowing passengers to watch movies and other entertainment initially only offered English-language programming, which limited their popularity.
They now offer five different languages, but the system's future is still "up in the air," he said, reiterating that he ultimately hopes to offer passengers in-flight gambling.
