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Ryanair to launch winter seat sale

A Ryanair plane05/09/13

By James O'Brien

Ryanair will fly less and reduce its fares this winter in a bid to reverse flagging profits.

The low-cost airline has been forced to review its approach as greater competition and difficult economic conditions throughout Europe have affected how much profit it makes per passenger.

It has decided to selectively cut its winter season schedules and introduce lower fares and "aggressive" seat promotions.

The move will reduce its yearly traffic forecast by more than 500,000 to around 81 million, while profits will be more towards £483 million than £508 million, the top end of its previous forecast.

Word of the strategy led to its shares falling by 14 per cent, with easyJet's dropping by seven per cent in the FTSE 100 Index.

TUI Travel, owner of Thomson Holidays, and International Airlines Group, parent company of British Airways, were each down four per cent.

Ryanair chief executive Michael O'Leary last month revealed the firm was struggling somewhat as July's heatwave saw fewer people from northern Europe head abroad.

There was an improvement in August but that has been followed by a "perceptible dip" in future fares and profits for the next three months.

The airline put this down to a number of things, including greater price competition and rivals increasing capacity in markets both at home and abroad.

Ryanair said: "We will respond to this lower yield outlook by selectively reducing our winter season capacity, thereby cutting our full year traffic target from over 81.5 million to just under 81 million.

"We are also rolling out a range of lower fares and aggressive seat sales particularly in those markets mainly UK, Scandinavia, Spain and Ireland."

It added it is optimistic it will consistently meet revised passenger targets, even if they are at lower fares and profits than previously forecast.

"Accordingly it is prudent to advise shareholders that our full year profit after tax guidance will now be at the lower end of our 570 million euros to 600 million euros range," Ryanair said.

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