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Ryanair shares tumble as it warns weak bookings will hit full-year profits Ryanair shares tumble as it warns weak bookings will hit full-year profits
(about 1 hour later)
Ryanair could miss its full-year profit forecast as increased competition forces it to cut fares and capacity, while austerity measures in the eurozone and a weak sterling hit demand, Europe's biggest budget airline said on Wednesday. Ryanair could miss its full-year profit forecast as increased competition forces it to cut fares and capacity, while austerity measures in the eurozone and a weak pound hit demand, Europe's biggest budget airline said on Wednesday.
The Irish group, which has routinely beaten profit forecasts in recent years, said it now expects its full-year net profit to be at the bottom end of its previously guided range of €570-600m (£480-505m). Its shares tumbled almost 15% after the warning, wiping more than €1bn from the group's value. The Irish group, which has routinely beaten profit forecasts in recent years, said it now expected its full-year net profit to be at the bottom end of its previously guided range of €570-600m (£480-505m). Its shares tumbled almost 15% after the warning, wiping more than €1bn from the group's value.
"If fares and yields continue to weaken over the coming winter there can be no guarantee that the full-year outturn may not finish at or slightly below the lower end of this range," it said in a statement."If fares and yields continue to weaken over the coming winter there can be no guarantee that the full-year outturn may not finish at or slightly below the lower end of this range," it said in a statement.
The airline said in recent weeks it had noticed a "perceptible dip" in forward fares and yields in September, October and November, which it said had been impacted by increased price competition and increased capacity in the UK, Scandinavia, Spain and Ireland. The airline said in recent weeks it had noticed a "perceptible dip" in forward fares and yields in September, October and November, which it said had been affected by increased price competition and increased capacity in the UK, Scandinavia, Spain and Ireland.
It said weak economic conditions in Europe and a weaker sterling were also having an impact. It said weak economic conditions in Europe and a weaker pound were also having an impact.
"This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Donal O'Neill, analyst with Goodbody stockbrokers."This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Donal O'Neill, analyst with Goodbody stockbrokers.
"The stock and sector will likely sell off heavily on the back of this news.""The stock and sector will likely sell off heavily on the back of this news."
Ryanair said it will respond to weak forward bookings by cutting its capacity for the year to 81m seats from 81.5m and introducing "aggressive seat sales" particularly in the UK, Scandinavia, Spain and Ireland. Ryanair said it would respond to weak forward bookings by cutting its capacity for the year to 81m seats from 81.5m and introducing "aggressive seat sales" particularly in the UK, Scandinavia, Spain and Ireland.
It made no reference to recent media reports questioning its safety record.It made no reference to recent media reports questioning its safety record.