Ryanair warns of airline fares war this summer

A Ryanair plane

Ryanair says it could cut fares by as much as 9% on some routes as competition in the airline industry intensifies in the next few months.

The warning from Europe's largest carrier by passenger numbers follows similar comments about price pressures from Ryanair's rivals in recent weeks.

Competition was growing as airlines switched capacity from Turkey and North Africa, Ryanair said.

Separately, Ryanair said it had made a "non-binding offer" for Alitalia.

On Friday, Italian media reported that about 10 offers had been made for the loss-making airline.

In a statement, Dublin-based Ryanair said it was "important we are involved in the process" given that Alitalia is Italy's largest carrier.

'Very competitive'

Ryanair's comments came as it reported a 55% rise in pre-tax profits to 397m euros (£356m) in the three months to 30 June. Revenues were up 13% to 1.68bn euros.

The average fare during the quarter rose 1% to 40.3 euros, although Ryanair said this was a blip due to the much stronger Easter trading. Easter, a peak-time for holidaymakers, fell in April this year, inside the carrier's reporting period. In 2016, it fell in March.

The airline said it expected fares to fall by 5% in the six months to the end of September and by 8% in the six months to the end of March 2018.

"We expect the pricing environment to remain very competitive" chief executive Michael O'Leary said in a statement. EasyJet and Wizz Air have both said that fares will be under pressure this summer.

The warning sparked a 3.5% fall in Ryanair's share price. EasyJet shares fell 3.4%, while the owner of British Airways, IAG, fell 2.7%.

In a bid to recoup some lost revenues, Ryanair is considering limiting the number of passengers eligible to take a second free carry-on bag. Revenues from people paying to take luggage have fallen at the airline.

Mr O'Leary told analysts that it was possible that only passengers who paid for priority boarding would be eligible. However, he added that no decision had been made.

Ryanair executives also repeated warnings of major flight disruptions between the UK and Europe if Brexit talks fail to agree a bi-lateral deal on flights. The airline has warned it may cancel flights and move operations abroad if there is no agreement well in advance of Brexit.

"We need clarity so that we can plan our schedules for 2019," chief financial officer Neil Sorahan told the BBC.

EasyJet announced last week that it had secured an air operator's certificate in Austria to enable it to keep flying across the EU following Brexit.

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