Ryanair issues profit warning after collapse of pound

Ryanair has blamed its decision to issue a profit warning on the sharp collapse suffered by the pound in the wake of Britain's vote in favour of leaving the European Union.

The budget airline, which actively supported the "Remain" campaign in the lead-up to June's referendum, said on Tuesday (18 October) that it has cut guidance on full-year profit by 5% to a range between €1.30bn and €1.35bn.

The Dublin-based company blamed its decision on the ongoing decline of the pound, which has wiped 18% off the value of the UK currency over the last four months.

Sterling touched a new six-year low against the euro on Monday and was trading at €1.11 early on Tuesday morning, after losing 6% over the last two weeks.

Ryanair added that the referendum's impact on the pound would reduce average fares by between 13% to 15% in the second half of its financial year.

"While higher load factors, stronger traffic growth and better cost control will help to ameliorate these weaker revenues, it is prudent now to adjust full year guidance which will rise by approximately 7% over the 2016 financial year rather than our original guidance of 12%," said group chief executive Michael O'Leary.

"This decline is primarily due to the impact of weaker sterling on our second half fares."

Earlier this month, Ryanair's main rival, easyJet, cut its profit outlook. The Luton-based carrier estimated the falling price of sterling since the Brexit vote in June would cost it £90m, and that annual pre-tax profits would come in at between £490m and £495m, well below the £686m it posted last year.