Infamous low-cost carrier Ryanair has warned investors that its profits may not be as much as forecast. The low-cost airline, which is Europe’s biggest, claims that it’s faced immense competition from rival airlines that has reduced total earnings.
The Irish airline is Europe’s largest low-cost carrier, and has historically been one of several low-cost success stories. Despite its commercial success, the airline has been criticised by travellers and rival companies alike for its ‘harsh’ customer service.
The company announced that its profits had suffered due to a decline in bookings and a slight reduction in the cost of tickets for many of its major routes. Its shares suffered from the announcement, closing 11 percent lower after the statement.
Ryanair was not the only airline to face a decline in share value. Rival Easyjet lost five percent of its share value as increased competition from budget airlines hurt shareholder confidence.
The airline has pointed to a variety of additional reasons for its ailing profits. The weak economic conditions in many European countries have reduced demand for tickets in many of Ryanair’s most profitable markets.
Other issues include a weak pound, which has affected the airline’s earnings. Over 25 percent of Ryanair’s bookings are completed using pound sterling, reducing its average profit on fares booked from within Britain.
The company will keep a large portion of its fleet grounded over the winter to cut operational costs. Previous estimates of 50 grounded aircraft have been increased, with the airline now forecasting as many as 80 aircrafts out of action during winter.
It will also launch an aggressive fare-cutting campaign aimed at increasing demand in many of its core markets. Ryanair announced that it will launch a £14.99 one-way sale on 1,000 of its routes during the autumn and winter season.
