Ryanair expects air fares to continue falling this year
Profits fall 8% to €94.7m at the Irish airline on the back of cheaper fares and weak sterling
Ryanair faces continuing uncertainty over Brexit. Photograph: Tony Gentile/Reuters
Ryanair expects air fares to continue falling this year following a 17 per cent drop in the last three months of 2016 that hit its profits. The airline reported profits for the three months ended December 31st fell 8 per cent to €94.7 million from €103 million on the back of cheaper fares and weak sterling.
Revenues at the Irish airline rose 1 per cent to €1.345 billion in the period from €1.33 billion during the same three months in 2015.
Speaking after it published the results on Monday, chief marketing officer Kenny Jacobs confirmed that charges were also down in the current quarter, the last before its financial year ends on March 31st.
“You are going to see fares down all the way through 2017,” he said. Mr Jacobs added that it would not be possible to estimate the rate at which they would fall until Ryanair had a clearer view of bookings past March.
Passengers paid an average of €33 for a Ryanair flight in the three months to the end of December, 17 per cent less than during the same months in 2015.
Chief executive Michael O’Leary noted that the company had previously predicted that this would happen as it grew traffic in many European markets. “These falling yields were exacerbated by the sharp decline in sterling following the Brexit vote,” Mr O’Leary added.
Passenger numbers rose 14 per cent to 28.8 million from 24.9 million, while it sold 95 per cent of the available seats on its aircraft, a record for its third quarter.
Ryanair slashed costs by 12 per cent, opened 95 new routes and five new bases, and took delivery of 10 new Boeing 737-800 craft, during the period.
The company returned €311 million to investors under a €550 million share buy-back programme, which Ryanair expects to complete this month.
However, the repurchase of its American Depositary Receipts (ADRs) – which allow US investors to buy its shares on the New York market – has been slower than expected.
The board has agreed to give the company the authority to buy ADRs outside regular buyback programmes.
As Ryanair is an Irish airline, non-EU shareholders cannot own more than 49 per cent in total of the company.
Mr O’Leary acknowledged that the carrier faces continuing uncertainty over Brexit and stressed that this would be a challenge for the rest of the current financial year and into 2018.
“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,” he said.
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.