Low-cost airline Ryanair goes into a steep dive after shock profits warning

Firm is now slashing capacity over winter, grounding as many as 80 aircraft to cut costs

Ryanair fired off a shock profits warning today that sent shares crashing 14 per cent, after the budget airline admitted the summer’s heatwave meant would-be passengers stayed put.

Chief executive Michael O’Leary also warned of slow autumn demand, meaning Ryanair is now slashing capacity over winter, grounding as many as 80 aircraft to cut costs.

That comes off the back of a disappointing summer: the Irish carrier is traditionally able to push through double-digit fare hikes for passengers who book last-minute flights, particularly during its peak summer season. This year, though, the heatwave saw a fall in demand for sunny breaks, meaning Ryanair couldn’t cash in.

The twin pieces of bad news mean the airline, which routinely beats its own forecasts, now expects net profit for the year to be at the lower range of its earlier forecast of €570 million (£483 million) to €600 million. It warned: “if fares and yields continue to weaken over the coming winter there can be no guarantee that the full-year [profit] may not finish at, or slightly below, the lower end of this range.”

Ryanair also trimmed its full-year traffic target by more than 500,000 passengers to just under 81 million. 

The news sent shares in rival airlines tumbling: easyJet was off 7%, British Airways owner International Airlines Group was 4 per cent cheaper, as was Thomson Airlines owner Tui Travel, and low-cost carrier Norwegian Air dropped 6 per cent.

“Late bookings in July were weaker than expected, due primarily to the heatwave, and weaker exchange rates,” said O’Leary. “Bookings into September, October and November have been slower too. Last year, we had the Olympic bounce, with a surge in demand after the Games finished, and it may be that we didn’t take that into account in our forecasts. But I think it’s more than that. We have noticed a perceptible dip in forward fares.”

In July, Ryanair reported a 21 per cent drop in net profit to €78.1 million. O’Leary blamed slow demand on the ongoing impact of austerity, tough economic conditions across Europe, and weaker exchange rates.

But investor gloom is good news for passengers: Ryanair said it will “aggressively” cut fares and run seat sales, particularly in the UK, to lure more people to its seats this winter.

The shares fell 92 cents to €5.86.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
News
people
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced