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Ryanair cuts full-year profit forecast

(Sharecast News) - Ryanair cut its full-year profit forecast on Monday as it posted a 93% decline in third-quarter net profit, as higher fuel costs offset revenue gains and after its flights were removed from online travel agents. Net profit fell to €15m from €211m in the same period a year earlier. Ryanair said traffic rose 7% during the quarter to 41.4m and average fares grew 13% to over €42, but the fuel bill was 35% higher at €1.2bn.

Ryanair now expects FY24 profit after tax of between €1.85bn and €1.95bn, down from previous guidance of €1.85bn to €2.05bn. It cautioned that this guidance and the full year results remain "heavily dependent" on avoiding unforeseen adverse events in the fourth quarter, such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays.

The company said: "While traffic and fares were ahead of prior year, close-in Christmas/New Year loads and yields were softer than previously expected as Ryanair lowered prices in response to the sudden (but welcome) removal of flights from OTA Pirate websites in early December."

Russ Mould, investment director at AJ Bell, said: "Ryanair has never had a policy of making friends - with chief executive Michael O'Leary a living, breathing exemplar of its robust and combative approach.

"However, its belligerence seems to have had a negative impact after it was cut from some booking sites in early December, seemingly over a wrangle about online agents scraping Ryanair fares from its own website. This is a key reason why the company is cutting its profit outlook.

"With O'Leary calling the firms in question 'pirates' when the issue the first came to light in early January the prospects for a rapprochement look slim. Shareholders will have to hope guidance for the issue to be a temporary one proves accurate.

"The other contributor to the earnings downgrade is likely to lead to wider turbulence in the sector as the company flagged a big increase in fuel costs. The recent rise in oil off the back of tensions in the Middle East could see this become an increasing issue for the industry.

"Finally, Ryanair is caught up in another hot button issue in the aviation sector as it faces the prospect of further delays on the delivery of new, more fuel-efficient, Boeing 787 MAX 8 aircraft. Despite Boeing being embroiled in a safety scandal, Ryanair has delivered a notable vote of confidence in the plane maker, offering to buy any 737 MAX 10 aircraft rejected by US airlines 'at the right price'."

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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