Ryanair Holdings issued (04-Sep-2013) a trading update and cautioned that while it "remains comfortable with its H1 guidance, a recent weakness in forward yields into Q3 suggests that there will be no upgrade to full year guidance, as the airline now expects the full year outturn will be at the lower end of its full year net profit range of €570m to €600m". The carrier however noted that "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". Ryanair CEO Michael O'Leary said: "As indicated during our Q1 results presentation on July 29, close in late bookings in July had been at weaker than expected yields due primarily to the heatwave in northern Europe and weaker sterling/euro exchange rates. The close in booking pattern returned to some normality in August, which will ensure that our H1 guidance remains unchanged, which is for a small increase in H1 profits over the prior year H1 comparable. However in recent weeks we have noticed a perceptible dip in forward fares and yields into September, October and November". The company said it believes the dip is due to a combination of factors:
- Increased price competition and some capacity increases in the UK, Scandinavia, Spanish and Irish markets;
- The continuing effect of austerity and weak economic conditions across Europe;
- Weaker sterling/euro exchange rates.
Mr O'Leary said the carrier would respond to this lower yield outlook by selectively reducing winter season capacity, thereby cutting its full year traffic target from over 81.5 million to just under 81 million passengers. It is also rolling out a range of lower fares and aggressive seat sales particularly in those markets mainly UK, Scandinavia, Spain and Ireland. The carrier added, "Ryanair remains confident that we will continue to hit our revised passenger targets albeit at lower fares and yields than originally expected. Accordingly it is prudent to advise shareholders that our full year profit after tax (PAT) guidance will now be at the lower end of our €570m to €600m range. However even at or slightly below this full year number of €570m PAT, Ryanair cash flows and balance sheet remain in rude good health and there is no change to our recently announced plans to complete share buybacks of at least €400m (€177m already completed in FY March 2014) and up to €600m via a combination of dividends and/or buybacks in FY March 2015." [more - original PR]