Ryanair profits see surprise fall in third quarter as Brexit bites

Ryanair profit drops due to overcapacity

In the final three months of 2016, Ryanair saw its average fares fall faster than it "initially planned", the airline also saw its profits fall.

In July, the carrier said the decision by Britain to quit the European Union was "a surprise and a disappointment", and it would "pivot" growth away from United Kingdom airports and focus more on growing European airports over the next two years.

The low-priced airline said fares had fallen by 17% to an average of €33 per passenger in the last three months of 2016 as it expanded in European markets.

"As previously guided, our fares this winter have fallen sharply as Ryanair continues to grow traffic and load factors strongly in many European markets".

A weaker pound means that fares paid by United Kingdom customers translate into lower income for Dublin-based Ryanair - which is Europe's largest airline by passenger numbers. Ryanair expects uncertainty over Britain's decision to leave the European Union, instability in markets like Turkey and the pound's drop to keep depressing prices.

Budget carrier Ryanair is expecting a sharp decline in fourth-quarter yields, although it is maintaining its full-year forecast of a €1.3-1.35 billion profit.

Net profit for the quarter fell to 94.7 million euros from 102.7 million euros a year earlier, but was partially offset by an increasing demand from consumers. Unit costs in the quarter fell 12%, or 6% excluding fuel.

Ryanair still expects to see a modest increase in profits for the current financial year but said this "heavily depends on the absence of any unforeseen security events".

The Dublin-based airline said sales for the quarter barely rose, even as it carried 16% more passengers. It described its outlook for the rest of the year as "cautious".

"There's a huge amount of capacity which has migrated out of North Africa into the likes of Portugal and Spain", Ryanair chief financial officer Neil Sorahan told the BBC.

While the firm has recently extended its growth deal at Stansted and said there may be further opportunities to expand at United Kingdom airports, it expects growth in the United Kingdom to be "at a slower pace than previously planned".

Europe's busiest short-haul airline, whose growth target aims at expanding from the 106 million passengers a year it carries today to 180 million by 2024, said that the price environment for air fares remained weak.

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