Ryanair flight prices to fall further this summer

Ryanair (RYA.IR) expects summer fares will be much lower than last year after profits at the budget airline fell by almost 50%.

Ticket prices fell 15% in the three months to June after Michael O’Leary, the chief executive, was forced into a series of sales in order to fill the company’s 500 planes. The average fare fell 15% to about €42 (£35) year on year.

Ryanair said it now expected fares between July and September to be "materially lower" than last year, rather than "flat to modestly up" as it previously expected.

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The typical Ryanair fare in June stood at €41.93 in June, down from €49.07 the year before. Fares promotions are now priced at £19.99 or £29.99.

The company said cost-conscious passengers were cutting back while the timing of Easter holidays had also hit earnings.

“We have tried in recent weeks to close off some cheap seats and price passengers up, but are meeting resistance,” O’Leary said.

Finance chief Neil Sorahan said that Ryanair has struggled to make higher fares stick after it lifted prices more than 20% last year.

Sorahan said: “There’s no shortage of demand, in fact it’s as strong as I’ve ever seen it. But people are being more cautious about what they do with their money.

“They are happy to spend and they’re travelling in numbers. They’re just a bit more frugal and they’re taking a bit of a breath.”

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Analysts said that by cutting prices further, Ryanair’s competitors would be under pressure do the same.

“More aggressive discounting by Ryanair is likely to have adverse implications for the peak quarter pricing outlook for the rest of the industry,” said Gerald Khoo, analyst at Liberum.

Europe’s largest airline reported profits of €360m (£303m) in the spring quarter, 46% lower than the same period last year, despite passenger numbers rising 10% to 55.5 million.

The downbeat results, which missed analysts’ estimates, drove the budget carrier’s share price down 16% on Monday.

Ryanair said while it expected strong demand this summer, with passenger numbers likely to be up 8% overall this financial year.

The budget carrier said that continuing issues with the supply of aircraft from Boeing and Airbus will act as a brake on capacity and help bolster prices going into the end of the year.

Ryanair also said it was yet to put a cost on disruption caused by the global IT meltdown on Friday that hit aviation hard, forcing the cancellation of thousands of flights worldwide.

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