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Ryanair to cut fares sharply in coming months

Crisis-hit Ryanair has apologised to its pilots and offered to pay more than budget airline rivals, as the likes of EasyJet look to profit from sector turbulence that continued to rumble on Friday.

[DUBLIN] Ryanair on Monday said it would to cut ticket prices by as much as 9 per cent in the coming months, raising pressure on rivals in Europe's highly competitive short-haul market.

Ryanair, Europe's largest airline by passenger numbers, has helped drive down short-haul ticket prices in Europe by increasing its capacity by 33 per cent, or about 30 million seats, in the past two years.

Low-cost rivals easyJet and Wizz Air have both in recent weeks warned that average fare levels would continue to be under pressure over the key summer period.

Ryanair's Chief Financial Officer Neil Sorahan told Reuters that fares could fall by as much as 7 to 9 per cent in the three months to the end of September.

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Ryanair said its profits were up 55 per cent in the three months to the end of June after average fares posted annual growth of 1 per cent in the period, largely due to the fact that Easter did not fall in the equivalent quarter last year.

The profit of 397 million euros (S$630.9 million) after tax compared to an average forecast of 366 million euros in a company poll of analysts.

But it restated its forecast that fares would fall by 5 per cent in the six months to the end of September and by 8 per cent in the six months to the end of March 2018. Some analysts had forecast it would scale back fare cuts.

"We expect the pricing environment to remain very competitive" in the six months to end-March, Chief Executive Michael O'Leary said in a statement.

Ryanair reiterated its forecast that it would make a profit after tax of between 1.4 and 1.45 billion euros in its financial year, which ends on March 31, 2018. The average forecast by analysts polled by Ryanair ahead of the release was for a profit of 1.488 billion.

Ryanair said it expects to fly 131 million passengers in the year to the end of March 2018, up from an earlier forecast of 130 million and it said the extension of leases on 10 planes would give it additional capacity during the next two summers.