Has Ryanair reduced the rates as low as they will go? – Quartz

With few exceptions, most people book a Ryanair flight for the cheap fare. The airline constantly promotes its low prices. Its CEO boasts incessantly of them. The baggage exchange policy of the airline is a manifestation of its increasingly complicated Try to make even cheaper tickets.

But what Ryanair knows most also seems to be affecting his earnings. In its second earnings warning in four months, the European low-cost airline warned that it was lowering expectations. As of November, rates fell by 7% on average, more pronounced than the 2% guide that operators gave to badysts. At the close of its financial year on March 31, earnings will fall between € 1 trillion and € 1.1 trillion ($ 1,140 trillion to $ 1,250 trillion), which is 100 million euros lower than a previous forecast.

Outspoken's CEO, Michael O & # 39; Leary, said: "While we are disappointed by this slightly lower guide for the whole year, the fact that it is the direct result of the lower air fares than expected in the second half, compensated by stronger than expected growth in traffic, is better The performance in unit cost and auxiliary sales is positive for the medium term ".

In other words: while the growth of pbadenger traffic is on the rise and the revenues of checked bags, priority boarding and warm beer are strong, the rates are too cheap to generate the benefit that airline executives expect. Part of this is because there is too much competition in the low-cost and short-haul sector, which makes prices even lower. (Ryanair is often the aggressor in the price wars of the industry). O & # 39; Leary has been very expressive in his prediction that competitors like Wow Air and FlyBe will not be able to survive the winter period, emphasizing to the shareholders that others have it much worse.

In addition, the uncertainty about the Brexit result, on which O'Leary has also expressed itself openly, could affect traffic on key routes in the coming months.

Ryanair shares fell 5% immediately after the announcement before regaining some altitude as the day progressed. Ryanair's share price has fallen 40% in the last year, which has underperformed its short-haul rival EasyJet.

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