Dip in profits for Ryanair 'exacerbated' by EU referendum fallout

Profits at Ryanair dipped in the third quarter amid a backdrop of tough competition and a challenging outlook.

The Irish carrier said profit after tax fell 8% to 95 million euro (£81 million) in the three months to the end of December.

The firm said average fares fell 17% to 33 euro per passenger as it ramped up competition with rivals, with prices set to go even lower.

Ryanair chief executive Michael O'Leary also said the collapse in sterling following the EU referendum "exacerbated" the hit from falling fares.

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

"These falling yields were exacerbated by the sharp decline in sterling following the Brexit vote.

"Ryanair responded to this weaker environment by continuing to improve our Always Getting Better customer experience, cutting costs, and stimulating demand through lower fares which has seen load factors jump to record levels."

Traffic grew 16% to 29 million customers and Ryanair maintained its full year profit guidance of between 1.3 billion euro (£1.12 billion) to 1.35 billion euro (£1.16 billion), but said this is dependent on the absence of any "unforeseen security events" taking place, adding the outlook for 2017 is "cautious".

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 UK airports and focus more on growing European airports over the next two years.

On Monday, Ryanair reiterated the stance, saying: "While it appears that we are heading for a 'hard' Brexit, there is still significant uncertainty in relation to what exactly this will entail.

"This uncertainty will continue to represent a challenge for our business for the remainder of 2017 and 2018.

"We expect sterling to remain volatile for some time and we may see a slowdown in economic growth in both the UK and Europe as we move closer to Brexit.

"While there may be opportunities to expand at certain UK airports (such as the recent extension of our growth deal at Stansted), we expect to grow at a slower pace than previously planned in the UK."

British airlines are waiting with bated breath to discover whether the UK will remain a member of the EU's Open Skies aviation free market.