Ryanair vows to launch price war by slashing fares by 9%

Ryanair vows to launch price war by slashing fares by 9%

Ryanair has vowed to wage a summer flights price war by slashing fares by as much as nine per cent.

The budget airline is reducing prices as competition increases over peak holiday season.

Ryanair also revealed that its profits soared by 55 per cent to £356million in the three months to June, while revenue rose to £1.7 billion in the same period.

Ryanair has vowed to wage a flights price war by slashing fares by as much as nine per cent

Europe's largest passenger carrier has also made a 'non-binding offer' for Alitalia, Italy's largest airline.

A spokesman said it was 'important we are involved in the process' regarding the future of the ailing airline.

Ryanair's profits were boosted by the timing of Easter, with a 12 per cent rise in customer numbers to 35 million.

Average fares rose one per cent in the  same period, but the airlines expects fares to fall by five per cent in the first six months of the year and by nine per cent in the second amid tough competition in the sector and as Ryanair passes on lower fuel costs.

Chief executive Michael O'Leary said: 'We expect the pricing environment to remain very competitive.'

Ryanair's chief financial officer Neil Sorahan insisted the airline is 'never that worried per se about fares'.

Ryanair chief executive Michael O'Leary said: 'We expect the pricing environment to remain very competitive.'

He told a central London press conference: 'We're what we call load active yield passive, which means we'll always hit the passenger target and the market more or less dictates what they're going to pay for those seats.'

By maximising passenger numbers the airline can achieve discounts in airport fees, spread its fixed costs among more customers and sell more ancillary products such as on-board drinks, car hire and accommodation, Mr Sorahan said.

He added: 'We will happily trade away fares to drive the other elements of the business and as you can see we're growing quite profitably.'

The group again sounded the alarm bell on Britain's divorce from the European Union as Tory ministers scramble to strike an a viation deal with Brussels before March 2019.

Ryanair's profits were boosted by the timing of Easter, with a 12 per cent rise in customer numbers to 35 million

It said it may be forced to cancel flights and move some of its UK-based aircraft to Continental Europe from April 2019 if there is no certainty about the legal basis of flights between the Britain and the EU by autumn next year.

Mr Sorahan warned that the chances of the UK remaining in the EU Open Skies agreement - through which there are no commercial restrictions for airlines flying within the EU - appear 'narrower by the day'.

He went on: 'Ryanair will clearly work in the best interests of our shareholders and customers to ensure we capitalise on all opportunities that are in the market.

'We're working hard with the various interest groups in Europe and in the UK to try and get people to start movin g this along at a pace that makes sense because the clock is ticking down.' 

Ryanair shares dipped nearly 3 per cent to 17.6p in morning trading off the back of the Dublin-based carrier's comments about fares and the fact that it is seeing lower bag revenue.

Neil Wilson, senior market analyst at ETX Capital, said: 'A huge jump in quarterly profits for Ryanair was not enough to assuage investor fears that the company is at the mercy of the pricing pressures felt across the sector.

'The push for more bums on seats means fares are coming down.' 

 

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