Ryanair Issues Future Profits Warning

Europe's largest low-cost airline Ryanair has today warned that profits could slide by up to 50% next year as high oil prices, declining consumer spending and the weakening pound all influence the market.

Ryanair Chief executive Michael O'Leary confirmed the fear, stating the aforementioned conditions could combine to create the “perfect storm” in the European airline sector, creating "a significant chance" that profits could decline in 2008/09.

Michael O’Leary added: "At our most optimistic, a combination of flat yields and $75 oil would see profits grow by 6% to approximately €500m, but at our most conservative, if forward oil prices remain at $85, and consumer sentiment/sterling weakness leads to a 5% reduction in yields, then profits in the coming year could fall by as much as 50% to as low as €235m,".

O’Leary’s apprehension came as Ryanair reported a 27% fall in third quarter profits at €35m (£25.54m), which despite the decline was described by Ryanair as a "creditable performance in very adverse market conditions". Michael O’Leary continued to be upbeat by citing their ability to grow net profits, in a year when most of their competitors were suffering declines or losing money, an achievement described as a “testament to the continuing strength of Ryanair’s guaranteed lowest fare business model across Europe”.

Despite Ryanair’s optimism that profits were still expected to be healthy, shares in both Ryanair and their cheap flights rival easyJet fell by over 13% & 7.4% respectively in this morning’s trading.