Ryanair Profits on Track Despite Falling Fare

Ryanair's average fares fell more than expected in the last three months of 2016 amid a capacity glut in Europe's short-haul aviation market, but the low-cost giant said it remains on track to post a modest increase in annual profits.

"While competition may ease in the coming year, the market will continue to be challenging, with average fares likely to post single-digit percentage falls," Chief Executive Michael O'Leary said.

Europe's short-haul carriers have struggled in recent months with overcapacity and Britain's vote to leave the European Union, with low-cost rivals Wizz and easyJet both trimming their annual profit forecasts in recent weeks, Reuters reported.

Ryanair, Europe's largest airline by passenger numbers, said average fares fell 17% in the three months to Dec. 31 and could fall up to 15% in three months to March 31. 

That is worse than its earlier forecast of a fall of between 13 and 15% over the six-month period.

Weak fares knocked its profit in the final three months of 2016, the third quarter of its financial year, by 8% year-on-year to €95 million ($102.2 million), compared to a forecast of €99 million in a company poll of analysts.

But it said it remained confident of meeting its profit guidance for its financial year to March 31 of €1.3 billion to €1.35 billion, which would imply an increase of around 7% year-on-year.