London - Ryanair reported an 8% drop in third-quarter earnings and said it’s 'cautious' about meeting full-year targets as a capacity glut and stuttering economies cause fares to tumble.
Profit after tax fell to €95m in the three months ended December 31 from €103m a year earlier, Dublin-based Ryanair said in a statement on Monday. Analysts had predicted that the figure would be barely changed at €102m, based on eight estimates.
Europe’s biggest low-cost airline saw prices tumble 17% in the quarter as it sought to undercut rivals, and said that trend’s set to continue. While 12-month profit should still be in the range of €1.3bn to €1.35bn, the company said it can’t be more specific and that any “security events” impacting near-term bookings could cause it to fall short.
“We are cautious into the balance of the year,” chief financial officer Neil Sorahan said in a phone interview. “Any other shocks to the market, be it air traffic control strikes or terrorism, if we were to see any major events than clearly all bets would be off.”
Ryanair shaved €75m from its profit target in October following the slump of the pound against the euro in the wake of Britain’s vote to quit the European union, which impacts the value of its sterling receipts when translated into the single currency.
The carrier reiterated that it expects to grow more slowly in the UK than it once planned.
The winter decline in ticket prices was steeper than the 13% to 15% previously forecast, though the reductions lifted passenger numbers 16 percent so that the carrier’s load factor reached a record 95%.
Fourth-quarter yields will decline as much as 15% and fares will remain “challenging” into fiscal 2018, Ryanair said, with rivals that have quit Egypt and Tunisia following terror attacks there saturating the market in Portugal, Spain and Italy.