LONDON: Europe's biggest low cost airline Ryanair is “very cautious" on its outlook for the winter as uncertainty from Brexit and security concerns from travellers persist, forcing the carrier to cut fares.
Chief Executive Michael O'Leary said Ryanair had stimulated travel demand by reducing summer prices by 9 percent after Britain's June vote to leave the EU, but was not sure what would happen from October onwards, when Europeans take fewer holidays.
That made him “very cautious" on the airline's forecast for profit to the year ended March 2017 to climb 13 percent to between 1.38 billion euros ($1.5 billion) and 1.43 billion euros.
“That's the impact of Brexit, we're cutting fares much more steeply than in the past," he told a news conference in London. A weaker pound risks deterring British travel to euro countries.
“If the fares in the second half of the year fall by more than 10 or 12 percent then we'll have to revisit full-year guidance." Europe's second biggest low cost carrier easyJet said in July it was unable to give an earnings forecast in the aftermath of Brexit, while Germany's Lufthansa downgraded its profit forecast and British Airways-owner IAG trimmed its 2016 growth plans.
O'Leary also on Wednesday gave further details of a plan to scale back capacity growth in Britain, where his Irish airline is the second biggest with an 18 percent market share.
He saw growth of 6 percent in the 2017-18 financial year, from 15 percent in the 12 months to March.
That growth would have been between 10 and 15 percent had Britain not voted for Brexit and the uncertainty that brought, said O'Leary, a prominent campaigner for Britain to stay in the EU bloc.
O'Leary is also worried about an EU rule which states that EU airlines like Ryanair must be 50.1 percent owned by EU shareholders.
If British investors were classed as non-EU, that would put Ryanair at odds with the rules.
He urged the UK government to allow the building of three new runways at each of London's biggest airports – Heathrow, Gatwick and Stansted – schemes that arouse strong local opposition in heavily-populated southern England.
“It'll be a really good response to the whole post-Brexit, what's Britain's future in the world, are we open for business, open for trade? You can't be open for business if there's no runway capacity in the main city," he said.
Heathrow, London's biggest airport, is operating at full capacity and the government is due to make a long-delayed decision as to whether to build a new runway there or at no.2 airport Gatwick this autumn. Stansted, London's no.3 airport, is Ryanair's biggest base.