Profit warning wipes €1 billion off value of Ryanair

More than €1 billion was wiped off the value of Ryanair yesterday as its shares fell by more than 12 per cent following its second profit warning in two months.

The airline published results yesterday showing revenues for the six months to September 30th – the first half of its fiscal year – up 5 per cent at €3.25 billion and profits after tax up 1 per cent at €602 million from €596 million during the same period last year.

However, its results statement included a warning that low air fares will hit its full-year profits, and it now expects the "out-turn to be between €500 million and €520 million due entirely to this lower fare environment".

Earlier warning
This is up to 20 per cent lower than the €570 million to €600 million full-year profit it predicted in an earlier warning issued exactly two months ago on September 4th.

Its shares plunged on the Dublin market following the news, shedding 77 cent or 12.6 per cent to close at €5.33 from an opening quote of €6.10. The fall knocked €1.1 billion off the company’value, which shrank to €7.63 billion over the course of yesterday’s trade.

About 30 million of its shares changed hands, a volume that brokers acknowledged was particularly high for the stock. The fall in its share price was on a similar scale to that sparked by its profit warning in September.

The news came as the airline began to introduce a number of changes designed to shore up its battered customer service reputation, following a pledge from chief executive, Michael O’Leary. These include streamlining its online booking procedures, which began last month, and introducing fully reserved seating from February, a move it announced yesterday.

It also came within six months of it formally announcing a deal to buy 175 new aircraft from US manufacturer Boeing. The purchase is part of a planned expansion programme that the airline says will leave it with a fleet of 410 and see it carrying more than 110 million passengers a year from 2019. The airline announced 10-year deals with Stansted and Moscow airports designed to underpin this expansion in recent weeks. It is also in talks with the Dublin Airport Authority, owner of Dublin and Cork airports, about the possibility of launching new services that would increase passenger numbers.

One million passengers
This is part of proposals to bring an extra one million passengers into the Republic's airports that the airline announced last month in the wake of the Government's budget pledge to drop the 3 per cent travel tax.

The airline carried 49 million passengers during the six months, a 2 per cent increase on the 48 million people it flew during the same period last year. Its full-year target is 81.5 million. Its figures yesterday showed that pretax profits in the first half rose less than 1 per cent to €685.4 million from €679.3 million during the same period last year.