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[DUBLIN] Irish low-cost giant Ryanair plans to cut fares sharply in coming months, but said it expects to boost profit by boosting its share of an increasingly competitive European short-haul market.
The airline, Europe's largest by passenger numbers, outlined the planned cut to fares on Monday as it reported net profit of 1.24 billion euros (S$1.92 billion) for the year ended March 2016, an increase of 43 per cent on the previous year.
Fares will fall by an average of 7 per cent in its current financial year, which ends on March 31, with fares falling by between 10 and 12 per cent in the winter months, chief executive Michael O'Leary said. "If there is a fare war in Europe, then Ryanair will be the winner," he said in a video presentation.
Ryanair expects to carry 116 million passengers in the year to March, an annual increase of 9 per cent.
Ryanair said in a statement it "cautiously" expected net profit to increase by approximately 13 per cent in the year to March 2017, to between 1.38 billion euros and 1.43 billion euros, less than the consensus of 1.47 billion in a poll of over 10 analysts compiled by the company ahead of the results.
Rivals including British Airways-owner IAG, Lufthansa and Air France-KLM have warned recently about increasing capacity in the sector and the impact on tourism from militant attacks in Paris and Brussels.
easyJet earlier this month said strong demand for beach holidays was making up for a drop in travelling in the wake of the attacks.
Ryanair shares closed Friday up 20 per cent compared to a year ago at 13.16 euros, while the Thomson Reuters European Airline Index was down 3 per cent. Ryanair shares have fallen 12 per cent since the start of the year, in line with the index.