Discounts to hit airlines in Europe
London, September 14, 2013
The profitability of European airlines will be squeezed in coming months due to heavy discounting by Ryanair, its Irish rival Aer Lingus said yesterday as it cut its profit forecast for the year.
Ryanair, which flies more international scheduled passengers than any other European airline, said last week it planned to introduce "aggressive" pricing to maintain volumes amid signs of weak demand in the autumn.
The threat of a price war comes as airlines struggle with high fuel costs and weak consumer confidence, although a lack of growth in capacity in recent years has kept ticket prices relatively stable.
"Ryanair has opened the taps," Aer Lingus chief executive Christoph Mueller said, adding price cuts were being felt across Europe and with "significant intensity" in markets such as Italy and Poland.
He said he believed Ryanair was selling tickets at up to 20 euros per passenger below cost on some routes.
Aer Lingus cut its profit forecast for the year by 13 per cent, saying its profit for the full year would be around 60 million euros ($79.5 million), down from a forecast of 69 million euros it made at the end of July.-Reuters