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| Ryanair Cuts Its Annual Outlook For the Second Time in Two Months | |
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| PARIS — Ryanair, the European budget airline, slashed its annual profit forecast for the second time in two months on Monday, reflecting the intensifying scramble for passengers among airlines, particularly in Western Europe, at a time of high unemployment and stalled economic growth. | PARIS — Ryanair, the European budget airline, slashed its annual profit forecast for the second time in two months on Monday, reflecting the intensifying scramble for passengers among airlines, particularly in Western Europe, at a time of high unemployment and stalled economic growth. |
| Ryanair, which recently began an aggressive digital marketing campaign to attract passengers, warned that net profit for the financial year ending March 31 could fall to 500 million euros, or $675 million, 12 percent lower than the company’s forecast in September of €570 million. | Ryanair, which recently began an aggressive digital marketing campaign to attract passengers, warned that net profit for the financial year ending March 31 could fall to 500 million euros, or $675 million, 12 percent lower than the company’s forecast in September of €570 million. |
| A drop in annual profit would be the first in a decade for the airline based in Dublin, Europe’s largest by number of passengers. Ryanair earned a record €569 million ($767 million) in 2012. | A drop in annual profit would be the first in a decade for the airline based in Dublin, Europe’s largest by number of passengers. Ryanair earned a record €569 million ($767 million) in 2012. |
| Ryanair shares finished nearly 13 percent lower in trading in Dublin at €5.30 ($7.15). Ryanair reported net profit of €602 million ($812 million) for the six months ended Sept. 30, up 1 percent from €596 million a year earlier. Revenue rose 5 percent to €3.1 billion ($4.2 billion). Given the size of Ryanair’s footprint in Europe — it carried more than 79 million passengers in 2012, well ahead of Lufthansa of Germany, which transported just over 64 million — analysts said its latest warning cast a long shadow over the outlook for the European industry as a whole. | Ryanair shares finished nearly 13 percent lower in trading in Dublin at €5.30 ($7.15). Ryanair reported net profit of €602 million ($812 million) for the six months ended Sept. 30, up 1 percent from €596 million a year earlier. Revenue rose 5 percent to €3.1 billion ($4.2 billion). Given the size of Ryanair’s footprint in Europe — it carried more than 79 million passengers in 2012, well ahead of Lufthansa of Germany, which transported just over 64 million — analysts said its latest warning cast a long shadow over the outlook for the European industry as a whole. |
| “Everything does look as if it is dependent on the recovery of the economies,” said Peter Morris, chief economist at Ascend, an aviation consulting firm based in London. “And at the moment, I don’t think that covers any of the big Western European ones,” like Britain, France, Germany, Italy or Spain, which have formed the core of Ryanair’s vast European network for the last 20 years. | “Everything does look as if it is dependent on the recovery of the economies,” said Peter Morris, chief economist at Ascend, an aviation consulting firm based in London. “And at the moment, I don’t think that covers any of the big Western European ones,” like Britain, France, Germany, Italy or Spain, which have formed the core of Ryanair’s vast European network for the last 20 years. |
| A number of large players, including Lufthansa, Air France-KLM, British Airways and Alitalia, are in the midst of deep restructurings of their operations that have involved cuts to staff and services, as well as the grounding of hundreds of aircraft. | A number of large players, including Lufthansa, Air France-KLM, British Airways and Alitalia, are in the midst of deep restructurings of their operations that have involved cuts to staff and services, as well as the grounding of hundreds of aircraft. |
| “It implies that demand is very weak going into the winter,” said Stephen Furlong, an analyst with Davy, a financial services adviser in Dublin. “Short-haul Europe now looks much more challenging for everyone.” | “It implies that demand is very weak going into the winter,” said Stephen Furlong, an analyst with Davy, a financial services adviser in Dublin. “Short-haul Europe now looks much more challenging for everyone.” |
| Some analysts said the slowing passenger growth experienced by Ryanair and others reflects a recent shift in the European industry’s center of gravity in terms of air traffic volume. According to Mr. Morris, traffic within important markets has dropped over the last five years — in Britain by 30 percent and in Spain by 40 percent — while traffic in faster-growing economies like Turkey is up by 200 percent and in Russia by 40 percent over the same period. | |
| “There is a feeling that the European market has moved east,” Mr. Morris said. | “There is a feeling that the European market has moved east,” Mr. Morris said. |
| Given the breadth of its network, analysts said Ryanair — which already flies to 29 different countries and is expanding rapidly in Eastern Europe — might be better placed to adapt to this change in the coming years than some of its higher-cost rivals. | Given the breadth of its network, analysts said Ryanair — which already flies to 29 different countries and is expanding rapidly in Eastern Europe — might be better placed to adapt to this change in the coming years than some of its higher-cost rivals. |
| Over the short term, however, Ryanair and its rivals are expected to face continued pressure to lower ticket prices on intra-European flights, further eroding revenue and profit as fuel prices remain stubbornly high. Net profit among European airlines slumped to €772 million ($1 billion) in the third quarter, from €1.3 billion ($1.75 billion) a year earlier, according to initial figures published Monday by the International Air Transport Association in Geneva. | Over the short term, however, Ryanair and its rivals are expected to face continued pressure to lower ticket prices on intra-European flights, further eroding revenue and profit as fuel prices remain stubbornly high. Net profit among European airlines slumped to €772 million ($1 billion) in the third quarter, from €1.3 billion ($1.75 billion) a year earlier, according to initial figures published Monday by the International Air Transport Association in Geneva. |
| Ryanair said its average fares in the three months that end Dec. 31 — which includes the busy Christmas travel period — were expected to fall 9 percent, compared with the same period a year ago. Those declines were likely to reach double digits for the January-to-March period, it added. | Ryanair said its average fares in the three months that end Dec. 31 — which includes the busy Christmas travel period — were expected to fall 9 percent, compared with the same period a year ago. Those declines were likely to reach double digits for the January-to-March period, it added. |
| The expected drop in fares this winter comes after an exceptionally competitive summer season in which Ryanair’s average ticket price fell by 2 percent for the six months that ended Sept. 30, compared with a year earlier. The number of passengers carried rose 2 percent, to 49 million. | The expected drop in fares this winter comes after an exceptionally competitive summer season in which Ryanair’s average ticket price fell by 2 percent for the six months that ended Sept. 30, compared with a year earlier. The number of passengers carried rose 2 percent, to 49 million. |
| Ryanair’s latest warning on profit comes as the airline’s pugnacious chief executive, Michael O’Leary, has taken to Twitter as part of an aggressive campaign to address common complaints about gruff customer service and high fees for services ranging from checking bags to modifying a boarding pass. | Ryanair’s latest warning on profit comes as the airline’s pugnacious chief executive, Michael O’Leary, has taken to Twitter as part of an aggressive campaign to address common complaints about gruff customer service and high fees for services ranging from checking bags to modifying a boarding pass. |
| On Monday, Ryanair announced plans to introduce assigned seating on all of its flights beginning early next year. The move should help put an end to the sometimes chaotic scramble for seats on Ryanair’s flights, among the top complaints registered during Mr. O’Leary’s recent live Twitter chats. | On Monday, Ryanair announced plans to introduce assigned seating on all of its flights beginning early next year. The move should help put an end to the sometimes chaotic scramble for seats on Ryanair’s flights, among the top complaints registered during Mr. O’Leary’s recent live Twitter chats. |