Ryanair expects 6% fall in fares in the fourth quarter and forecasts growth in passengers

Budget airline Ryanair revealed its net income for the quarter to the end of December 2015 fell short of forecast and said it expects average fares in the fourth quarter to decline more than initially expected.

The Irish carrier said on 1 February that it expects average fares to fall approximately 6% in the current quarter, compared with a previous estimate calling for a 4% drop, and following a 1% fall in the third quarter.

The company attributed the decline in fares to increased competition, lower oil prices and weakening demand following the terrorist attacks in Paris in November 2015 and forecast fares to remain lower in the short-term future.

"We expect the lower fare environment to continue for the foreseeable future with some respite during the summer months," said group chief executive Michael O'Leary.

Ryanair added that its net income in the three months to December amounted to €102.7m (£78.1m, $111.4m) up from €49m in 2014, but short of analysts' expectations of €118m, while revenue grew in line with forecast, rising from €1.13bn to €1.33bn.

Despite the lower-than-expected net profit, the Dublin-based airline reiterated its annual guidance for full-year profit after tax , which is expected to come in at the upper end of its forecast of between €1.17bn to €1.22bn.

However, the airline upped its guidance for the number of passengers it will fly this year to 106 million, from 105 million, after announcing in January 2016 it had carried more than 100 million passengers in the previous 12 months for the first time in its history as it reported a sharp increase in passenger numbers in December, due to lower fares.

The Irish group said the number of passengers it carried in the final month of 2015 rose 25% year-on-year to 7.5 million, while its load factor – a key gauge in the aviation industry as it measures the number of seats filled per flight – rose three percentage points to 91%.

Meanwhile, the carrier announced an €800m shares buy-back programme, which will get under way later this year.