Ryanair cuts annual forecast again on lower fares prospect

Irish no-frills carrier Ryanair indicated Monday its annual profit was set to fall for the first time in five years as intense competition was pushing average fares down by about 10 percent over the winter months.

Just two months after issuing its first profit warning in a decade, the airline cut its forecast further for its financial year ending in March, saying earnings would amount to only 510 million euros ($688 million), down from the 570 million euros predicted earlier.

Ryanair made a point of stressing that net profit for the first half of the year increased slightly despite a challenging business environment, with traffic rising by 2 percent to 49 million passengers.

Volatile business environment

'We're pleased to report increased first-half profits, particularly against the backdrop of softer fares this summer,' Chief Executive Michael O'Leary said in a statement.

CFO Howard Millar added on-board spending had been growing, but people had predominantly been booking discount fares which he took as a sign that recovery in Europe was still fragile.

'At the macro level in Europe, signals have gone green, but on the micro level things don't seem to be as strong as people think,' Millar commented.

In another move to raise its attractiveness, Ryanair said it would assign all seats on its planes, ending the often frenzied rush by passengers to secure the best seats and allowing families to sit together.