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Ryanair Shares Dive on Fresh Profit Warning

Irish no-frills airline Ryanair on Monday slashed its annual profits forecast for the second time since September owing to lower-priced fares, triggering a 14-percent slump in its share price.

The Dublin-based carrier expects annual profit after tax of not more than 520 million euros ($701 million), it said in a results statement, which compared with a forecast at the lower end of a 570-600 million euros range given just two months ago.

"We now expect the full year outturn to be between 500 million euros to 520 million euros due entirely to this lower fare environment," Ryanair said in the statement. Ryanair's fiscal year runs to the end of March.

Ryanair added that net profit rose 1.0 percent to 602 million euros in the group's first half, or in the six months to the end of September, as traffic rose 2.0 percent to 49 million passengers.

"We are pleased to report slightly increased first half profits, particularly against a backdrop of softer fares this summer," Ryanair chief executive Michael O'Leary said in the statement.

But the group's shares plunged 14.10 percent to 5.24 euros in late afternoon deals in Dublin.

That dragged down the market value of its rivals, with British budget airline Easyjet sliding 4.55 percent to 1,237 pence in London trade.

"Traffic has been very strong... but average fares remain weak due to increased competition, soft economic conditions, and the weaker euro/British pound exchange rate," Dolmen stockbrokers said in a note to clients.

Ryanair added that from February it will move to fully-allocated seating on all flights, ensuring that families sit together even without reserving in advance. There will be no charge for the service and is a result of increasing numbers of its customers wishing to reserve their seats in advance, for which there is a fee.

Ryanair is meanwhile seeking to soften its much-criticized public image of being a company that is lacking in good customer service.

Customers being hit by fines at the airport for failing to print off their tickets and for carrying too much weight in their luggage are among some of the biggest grievances, even if Ryanair's policy is posted on its website.

Ryanair recently simplified its online booking process, and will launch a new homepage later this month, after customers regularly complained about the confusing and long procedure.

Irish rival Aer Lingus issued its own shock profit warning in September, highlighting problems for the eurozone nation's airline sector, and not only for Ryanair.

Ryanair owns 29.82 percent of Aer Lingus but earlier this year the minority stakeholder was ordered by British regulators to slash its share to 5.0 percent, on grounds of unfair competition

Ryanair meanwhile transported almost 81 million passengers across Europe in the year to the end of October, company data revealed on Friday.

Source: Agence France Presse


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