Will Ryanair £1 seat sale make a comeback?


Michael O'Leary

Ryanair has shocked the City with news that it could miss its profit targets. Apparently too few people are travelling, so it has been forced to cut fares and reduce the number of flights. Investors were horrified, and the share price fell 15%.

However, this could be good news for budget travellers.

Profit warning

It told the stockmarket in a statement that: "If fares and yields continue to weaken over the coming winter there can be no guarantee that the full-year outturn may not finish at or slightly below the lower end of this range."

The came as a shock, because Ryanair is known for hitting and then beating its targets. RBC Capital Markets analyst Damian Brewer said in a note to investors: "Ryanair has historically delivered results well ahead of its own guidance so this is disappointing news."

However, the company said that there had been a real dip in the prices it could get for its flights in September, October and November - and that fewer people were flying.

The statement blamed competition from other airlines trying to get a slice of the budget market. It also blamed financial troubles in Europe and a weaker pound (as a quarter of its income is in sterling). In a previous statement in July, Ryanair had also pointed the finger at high fuel costs and government taxes putting people off flying.

The good news

It's bad news for investors, but there could be some good news for travellers. In a conference call Chief Executive Michael O'Leary said he wouldn't take this lying down. He will cut capacity (which isn't great news) but he also introduce "aggressive seat sales."

He said: "We are going to respond to this by being out there first and being aggressive in fare response".

The airline has already run an offer for £14.99 one way fares on up to 1,000 routes this autumn. You had to travel mid-week, and if you wanted to take luggage it would cost extra, but it was a sign of how keenly the airline is competing. That deal closed on Monday, but there is every indication that this is not the last of the sales.

There's also a chance that we could see the return of the £1 seat sales. Four years ago the airline ran this deal, and even with luggage families were able to get away for less than £50.

Sine then, sales have tended to be between the £6 and £20 mark - which is still better than a poke in the eye with a sharp stick - but doesn't quite have the ring of a sale that gets the whole family away for less than the price of a high street sandwich.

But there's hope that the £1 sale could make a welcome return. The last time Ryanair said that profits would be near the bottom end of the target range was four years ago (around the time of the £1 sale). The last time it missed a profit forecast (which is essentially what it is predicting now) was 2004, and it ran a 90p sale that year too.

It might be worth keeping your eyes peeled for another sale. Because while it may not be the nicest thing to profit from Michael O'Leary's misery, there are plenty of people who could probably live with themselves for doing it.