Ryanair cuts earnings forecast as pound plunges

The Irish carrier blamed an 18% fall in the value of sterling since the Brexit vote as it cut its annual earnings forecast by 5%.

It said fares fell more than expected in the first half of its financial year - down 10% - and were now set to drop by up to 15% in the final six months as the Brexit-hit pound takes its toll.

Ryanair expects full-year earnings of between h1.30 billion (£1.17bn) and h1.35bn (£1.22bn), down from the previous range of h1.38bn (£1.24bn) to h1.43bn (£1.28bn).

It comes after rival easyJet revealed a £90 million sterling impact earlier this month, on top of at least £125m in lost profit after a combination of terror attacks as well as air traffic control strikes in France and political turmoil in Turkey.

Ryanair and easyJet have also been slashing fares to boost demand.

“The recent sharp decline in sterling post-Brexit - which accounts for approximately 26% of Ryanair’s full-year revenues - will weaken second-half yields by slightly more than we had originally expected,” said CEO Michael O’Leary.

Ryanair said lower costs across the group were helping offset the impact of the pound and are set to fall by 3% excluding fuel over its full year.

Lower fares also seem to be helping sales as the group edged up the full-year forecast for its load factor - a key measure of how well it fills its planes - to 94% and said it now expected to carry 119 million passengers, up 12% year on year.

“While higher load factors, stronger traffic growth and better cost control will help to ameliorate these weaker revenues, it is prudent now to adjust full-year guidance,” added Mr O’Leary.”