Ryanair shares fall on concerns over lower fares

Ryanair's share price fell by 4.5 per cent yesterday to €5.35 on investor concerns about a decline in average fares.

At a press conference in Dublin yesterday, Ryanair deputy chief executive Michael Cawley said the airline would offer one million free seats for sale. This included taxes, fees and charges.

The impact, he added, could knock up to 10 per cent off its average fares for June. "That's an estimate," Mr Cawley added.

Ryanair's average fare is currently €41. The airline announced plans last week to sell 10 million seats for between €10 and €20 apiece, inclusive of taxes and charges.

About 12 million Ryanair shares traded in Dublin yesterday as investors worried about the impact the seat sales would have on the airline's bottom line.

Ryanair recently revealed that its load factor - the number of seats filled on each plane - fell year-on-year in April from 85 per cent to 83 per cent. EasyJet and Aer Lingus have also experienced soft load factors.

Mr Cawley had earlier described the one million free seat giveaway as a first for the sector. "This is unprecedented in the airline industry," he said.

There was some good news for Ryanair yesterday, though. The regional court of Bad Kreuznach in Germany dismissed claims made by Lufthansa against Ryanair's deal with Frankfurt Hahn Airport.

Lufthansa had argued that the deal contravened EU state aid rules. Frankfurt Hahn became a base for Ryanair aircraft in 2002.

The German airline's claim was rejected by the regional court yesterday. Lufthansa said it might appeal the decision.