Ryanair signals winter price war as it steps up efforts to lure business travellers

Ryanair is signalling the launch of another price war this winter as it steps up capacity on key routes and bids to lure more business travellers to the Irish airline.

The company yesterday said it expects after-tax profit for the current financial year, ending March 31st, to come in somewhere between €620 million and €650 million, about 21 per cent more than the €523 million in 2014.

However, it warned that this prediction, which is 4 per cent to 5.5 per cent higher than a similar forecast made in May, relies heavily on what it earns between the end of September and next March.

Marketing chief, Kenny Jacobs, sounded a note of caution about its full-year forecast, saying it is preparing to cut prices and boost seat numbers this winter.

]“It is going to be very very competitive,” he said, pointing out that Ryanair could face a similar environment to the closing months of last year, when it reduced fares dramatically in response to competition and issued two profit warnings.

In a statement, chief executive Michael O’Leary said that this year the airline intends to increase the number of seats on its network by 8 per cent over the winter months to “take advantage of growth discounts and build out business frequencies from Dublin and Stansted in particular”.

He added that this would inevitably push fares down and, as a result, yields: the amount the airline earns for every seat sold are only likely to rise by 2 per cent for the financial year.

Ryanair yesterday reported that post-tax profits for the three months ended June 30th grew 152 per cent to €197 million from €78 million during the same period last year.

According to the airline, the increase was primarily due to a 9 per cent increase in average air fares and the fact that it sold 86 per cent of the available seats on its aircraft during the quarter, compared to 82 per cent last year.

Ryanair is increasingly moving into primary airports leading to higher handling charges.