Ryanair cautious on outlook as fare slump clips earnings

Ryanair Holdings reported an 8% drop in three-month earnings and said it’s “cautious” about meeting full-year targets as a capacity glut and stuttering economies cause fares to tumble. Net income fell to E95m in Q3 ended Dec. 31 from E103m a year earlier, Ryanair said Monday. Analysts had estimated the figure would be barely changed at E102m. Europe’s biggest low-cost airline saw prices tumble 17% in the quarter as it sought to undercut rivals, and said that trend is set to continue. While 12-month profit should still be in the range of E1.3b to E1.35b, the Dublin-based 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,” CFO Neil Sorahan said. “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.” The winter decline in ticket prices was steeper than the 13 to 15% previously forecast, though the reductions helped lift Ryanair’s passenger tally 16% so that its load factor reached a record 95%. The company has also stepped up efforts to pare expenses and lifted its full-year target for unit cost cuts to 4 from 3%. Q4 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, according to Sorohan. Ryanair reiterated that it expects to grow more slowly in the UK than it once planned following the country’s June 23 vote to quit the EU. <br/>