Ryanair downgrades FY profit forecast on sterling weakness

Budget airline Ryanair cut its forecasts for full-year 2017 on Tuesday, pointing to the weakening of the pound following Britain’s vote to leave the European Union.

The company reduced its full-year net profit guidance by 5% to a range of €1.30bn to €1.35bn as it noted the 18% drop in sterling following the Brexit vote, which it said will cut average fares in the second half by 13% to 15%, compared to the previously guided 10% to 12%.

Ryanair confirmed that its first-half fares were slightly weaker, down 10% compared to a previously guided 9% drop. However, this will be partly offset by a better-than-expected cost performance.

It now expects full-year ex-fuel unit costs to fall by 3% compared to a previously guided 1%. The company also expects the full-year load factor – which gauges how full the flights are – to be 1% better than guided at 94%. In addition, it said traffic is expected to grow 12% from last year to 119m customers.

Chief executive Michael O’Leary said: “We would caution that this revised guidance remains heavily dependent upon no further weakness in H2 fares (-13% to -15%) or sterling from its current levels (€1 = £0.9050).

As Ryanair will continue to be load factor active and price passive throughout the winter season at these low prices, there has never been a better time for customers to book or fly with Ryanair."