Budget airline Ryanair (LON:RYA) saw profits fall 8 percent in the third quarter, a surprising set of results driven by Brexit uncertainty and a weaker sterling.
Net profit for the quarter fell to 94.7 million euros from 102.7 million euros a year earlier, but was partially offset by an increasing demand from consumers. Passenger numbers rose 16 percent to 29 million in third quarter, with planes flying at 95 percent capacity.
Ryanair’s CEO Michael O’Leary commented:
“As previously guided, our fares this winter have fallen sharply as Ryanair continues to grow traffic and load factors strongly in many European markets. These falling yields were exacerbated by the sharp decline in Sterling following the Brexit vote.
“While our punctuality remains industry leading, we have struggled this winter with particularly adverse weather, repeated ATC strikes, and ATC staffing related slot delays which saw punctuality fall from 90 percent last year to 88 percent in the first nine months of FY17”.
Ryanair attributed the profit fall to continued uncertainty following the Brexit vote, weaker sterling and the switch of charter capacity from Turkey, Egypt and North Africa into Spain and Portugal, adding that these factors would “continue to put downward pressure on pricing for the remainder of this year” and next. It remains “cautious” heading into 2017.
Ryanair expect to decrease ticket prices further heading into their fiscal fourth quarter, with prices falling as much as 15 percent. The company expects this to be a trend industry-wide, with other carriers foreseeing similar effects.
However, the airline maintained its full-year guidance of profit between 1.3 billion euros to 1.35 billion euros and reiterated that it intends to complete a 550 euro million share buyback program by the end of March. It added that 90 percent of the repurchase commitment has already been carried out.