Ryanair's stock price tumbled on Wednesday after it announced that it may miss its full year profit guidance and will cut its winter capacity, as competition heats up from competitors in the challenging winter months.
The Irish budget airline's share price dropped by as much as 14.9 percent and caused many other European airline stocks, such as EasyJet, to fall as the Irish company's CEO Michael O'Leary said he expected the European airline market to be weaker than generally expected in the coming months.
The company also said in a trading update that it faced increased price competition and some capacity increases from other airlines in the U.K., Scandinavia, Spanish and Irish markets.Firms like Norwegian, Aer Lingus and IAG's Iberia and Vueling are mounting pressure on the low budget Irish airline.
High fuel costs have dented the airlines' profits and Europe's largest discount airline now expects full year net profit to be at the lower end of its previously guided 570-600 million euro range ($750-790 million).
The company said it had noticed a dip in forward fares and yields for September, October and November, which it said was due to not just fiercer competition, but also because of a weak sterling-euro exchange rate. O'Leary said the sterling exchange rate was the number one reason for the weaker profit forecast, stating that it could impact full year revenue by £30-50 million.
Ryanair will now cut back on some winter routes and revised its full year traffic target to under 81 million from a previous target of over 81.5 million. O'Leary said he would ground 70-80 aircraft in the winter months.
In the trading update, O'Leary said, "We are also rolling out a range of lower fares and aggressive seat sales particularly in those markets mainly U.K., Scandinavia, Spain and Ireland."
The news follows months of differing news from Ryanair.