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Aer Lingus blames Ryanair for profit warning Aer Lingus blames Ryanair for profit warning
(4 days later)
Aer Lingus has issued a profit warning after predicting that the profitability of European airlines will be squeezed in coming months due to heavy discounting by Irish rival Ryanair.Aer Lingus has issued a profit warning after predicting that the profitability of European airlines will be squeezed in coming months due to heavy discounting by Irish rival Ryanair.
Ryanair, which flies more international scheduled passengers than any other European airline and is the biggest shareholder in Aer Lingus, said last week it planned to introduce "aggressive" pricing to maintain volumes amid signs of weak demand in the autumn.Ryanair, which flies more international scheduled passengers than any other European airline and is the biggest shareholder in Aer Lingus, said last week it planned to introduce "aggressive" pricing to maintain volumes amid signs of weak demand in the autumn.
The threat of a price war comes as airlines struggle with high fuel costs and weak consumer confidence, although a lack of growth in capacity in recent years has kept ticket prices relatively stable. "Ryanair has opened the taps," Aer Lingus chief executive Christoph Mueller said, adding price cuts were being felt across Europe and with "significant intensity" in markets such as Italy and Poland.The threat of a price war comes as airlines struggle with high fuel costs and weak consumer confidence, although a lack of growth in capacity in recent years has kept ticket prices relatively stable. "Ryanair has opened the taps," Aer Lingus chief executive Christoph Mueller said, adding price cuts were being felt across Europe and with "significant intensity" in markets such as Italy and Poland.
"We are less affected than other carriers in Europe, but clearly the offering currently on the market on some of the Ryanair routes is below their own cost level," Mueller said. He said he believed Ryanair was selling tickets at up to €20 (£16.70) per passenger below cost on some routes."We are less affected than other carriers in Europe, but clearly the offering currently on the market on some of the Ryanair routes is below their own cost level," Mueller said. He said he believed Ryanair was selling tickets at up to €20 (£16.70) per passenger below cost on some routes.
A Ryanair spokesman said it "would not comment on the excuses of high-cost competitors". Ryanair issued its own profit warning this month and with Aer Lingus following suit, it indicates pricing pressure will spread across the sector, said Investec analyst Gerard Moore.A Ryanair spokesman said it "would not comment on the excuses of high-cost competitors". Ryanair issued its own profit warning this month and with Aer Lingus following suit, it indicates pricing pressure will spread across the sector, said Investec analyst Gerard Moore.
Last month the Competition Commission ordered Ryanair to sell down its 29.8% stake in Aer Lingus to 5%, in a move that crushed the budget airline's ambitions to take over its Dublin-based rival. Aer Lingus cut its profit forecast for the year by 13%, saying its profit for the full year would be around €60m, down from a forecast of €69m it made at the end of July.Last month the Competition Commission ordered Ryanair to sell down its 29.8% stake in Aer Lingus to 5%, in a move that crushed the budget airline's ambitions to take over its Dublin-based rival. Aer Lingus cut its profit forecast for the year by 13%, saying its profit for the full year would be around €60m, down from a forecast of €69m it made at the end of July.
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