Ryanair issues profit warning following post-Brexit pound decline

Ryanair has announced a reduction in its full year net profit guidance due to the fall in in the pound following the UK’s vote to leave the EU.

An 18% fall of Sterling’s value post-Brexit will result in a 5% drop in profits from a previous range of €1.375bn - €1.425bn to a new range of €1.30bn - €1.35bn, the airliner claims.

The dip in Sterling’s value will laos cause a decrease in H2 average fares by between 13% to 15% as opposed to the previously guided 10% to 12%.

Ryanair confirmed that its H1 fares were slightly weaker at -10% compared to previously guided -9%.

However, these lower fares will be partly offset by a better than expected cost performance.

Michael O’Leary, Ryanair’s CEO, said: “The recent sharp decline in Sterling post Brexit (which accounts for approx. 26% of Ryanair’s FY17 revenues) will weaken H2 yields by slightly more than we had originally expected.

“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 which will rise by approx. 7% (over FY 2016) rather than our original guidance of 12%.

“This decline is primarily due to the impact of weaker Sterling on our H2 fares.

“We would caution that this revised guidance remains heavily dependent upon no further weakness in H2 fares (-13% to -15%) or Sterling from its current levels (€1 = £0.9050).”

On Monday, the pound fell to a new six-year low against the euro.

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