Shares at Ryanair have plummeted over 11% after the discount airline warned that its profits were likely to fall in 2013.
The airline now said it expected a profit of $674 million to $700 million for their fiscal year that ends in March. This was down from the projection the company had previously made of $764 million.
Ryanair announced it expected its fares to drop by 10% over the winter and was grounding some aircraft due to that drop. The airline also said it would introduce allocated seating starting next year in February.
The profit warning on Monday means that Ryanair would report its first drop in yearly profits in the past five years. The announcement also come only two months after the airline made it first warning over profits in more than 10 years.
Ryanair is the largest discount airline in Europe. It said its fares had been dropping due to an increased price competition, a weaker sterling-euro exchange rate and softer conditions in the European economy.
The warning came at the same time the company reported a profit of $794 million for six months ending September 30, which was an increase of just 1% from the same period one year ago.
The discount carrier also announced it carried over 49 million passengers over that period and revenue of $4.36 billion was generated, which was up 5% from last year during the same period.
Ryanair has been successful in robust growth the past few years as a downturn in the global economy saw a number of consumers turn to travel options that were more affordable.
However, Ryanair said over the upcoming 12 months a brief pause will be seen in growth of passengers.
Due to weak conditions in its key markets and the increased competition, Ryanair said it was looking to focus on making its service better to attempt to keep its existing customers and attract other new ones.
It announced a plan introducing allocated seating starting on February 1, 2014, which would allow its passengers to select their seats on the aircraft, as long as they had checked in online over 24 hours prior to departure.
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