Ryanair predicts fares will fall 6pc

RYANAIR expects fares to fall by 6pc by Easter as the tumbling oil price slashes the costs of flying.

The low-cost airline will save £327m (€430m) in the next financial year because of lower fuel prices following the fall in the oil price to around $35 a barrel from a 2014 peak of $115.

Yesterday, chief executive Michael O’Leary said he expected the ‘lower fare environment to continue for the foreseeable future’. Like other airlines, and hotel businesses, Ryanair offered a series of discounts to tempt people to travel after the November terrorist attacks in Paris. He said prices fell 1pc in the last three months of 2015 and explained: ‘We noted weaker pricing and bookings immediately after the terrorist events in Paris and Brussels.

‘We reacted to this by running price promotions and discounted fares to stimulate double digit traffic growth.’

He said it will continue to cut prices to maintain 8pc traffic growth. Net profit doubled in the third quarter to £78m and it predicts its full year net profit could reach £928m.

But O’Leary said this was dependent on how Easter performed and the presumption there will be no major terrorist attacks in Europe.

It also announced it will start its £600m share buyback scheme.

The company prefers to undertake the share buyback to reward shareholders rather than commit to a regular dividend.

O’Leary told analysts: ‘If you want a dividend yield go and buy a baked bean company or something.’

Analysts at Barclays said Ryanair had ‘very strong own capacity growth, in traditionally the weakest part of the year.’

Shares rose more than 5pc to €14.5.