£18 f lights to Europe

Ryanair cuts fares to the bone as price war rages

RYANAIR could be forced to slash fares again as it fights a vicious price war that is expected to cost it up to £180million.

Michael O’Leary, the budget airline’s boss, said passengers are getting record bargains, but this is hitting his firm in the pocket.

Return trips from London to other continental cities were yesterday being sold for as little as £18 by Ryanair, with comparison website Skyscanner saying average prices for some destinations have fallen by 26 per cent in a year.

That has eaten into its takings. Ryanair’s announcement yesterday marked the second time it has cut profit forecasts in the past four months.

Whereas before it said it expected up to £1.1billion in annual profits, the firm now says they could be as low as £880million.

Mr O’Leary said: ‘ While we are disappointed at this slightly lower full year guidance, the fact that it is the direct result of lower than expected air fares … is positive for the medium term. We believe this lower fare environment will continue to shake out more loss making competitors.’

He refused to rule out further cuts to fares, saying that Brexit disruption or unexpected security incidents could cause costs to go up. Fare prices are expected to fall by 7 per cent this winter, Ryanair said, compared to an earlier prediction of 2 per cent.

But while this will hit profits, the rock-bottom prices have attracted larger passenger numbers. Around 142million people are expected to have travelled with the airline in the year to the end of March, up from 130million the previous year.

And as passenger numbers rise the airline said it expects to make even more money out of so-called extras, such as charging travellers to reserve a seat, bring a second bag on board, or have more leg room. The Mail previously revealed Ryanair raked in more than £6million a day from these charges.

Ryanair’s profit warning came after a year of turbulence for the company. Its schedules were thrown into chaos by repeated striking and it provoked fury when it changed its carry-on bag rules.

Aviation expert Alex Macheras said major airline groups driving down fares means that ‘lower-cost competitors like Ryanair and Easyjet have got to go even lower’.

He added: ‘On top of that, Ryanair has had a very troubled year. Combined with the price cuts, that has hurt their bottom line.’