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Ryanair shares plummet after profit forecasts slashed

Shares in Ryanair traded lower by over 11 percent on Monday after cut its profit forecast for the year, but CEO Michael O'Leary hit back at claims that the airline has an image problem.

"I think we have always been cuddly," O'Leary told CNBC.

"We've been famed for our cuddliness. There's some kind of a media creation out there that we're running around abusing passengers. If you did you wouldn't grow to 81 million passengers."

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The Irish-based airline was recently voted the worst of the 100 biggest brands serving the U.K. market by consumer magazine Which? and O'Leary admitted in a recent annual general meeting that a reputation for treating its passengers badly might have become a problem, according to Reuters.

In August, Ryanair received media attention surrounding the safety of its operations. British broadcaster Channel 4 showed a program which alleged that pilots for Ryanair had "deep-rooted" concerns over the safety of the airline. The program, called "Ryanair: Secrets from the Cockpit - Channel 4 Dispatches," raised concerns that the airline's employment practices could have an impact on passenger safety.

At the time, O'Leary dismissed the survey as an attempt to unionize the airline by "playing the safety card," adding that pilots could express any concerns confidentially within Ryanair or to the Irish Aviation Authority.

But Ryanair has been on the charm offensive in recent weeks. It has announced it will have allocated seats from next February, a complicated website is being updated next week and one of the charges placed on customers forgetting boarding places is to be abolished.

"We're on time, we don't have delays, we don't lose your bag," O'Leary said.

(Read more: Ryanair safety concerns: Genuine or joke?)

His comments came as the airline reported annual profit is set to fall for the first time in five years. Intense competition in Europe has pushed average fares down by around 10 percent over the winter months, Europe's largest airline said on Monday.

Two months after issuing its first profit warning in a decade, the Irish budget carrier further cut its profit forecast for the year to March to 510 million euros ($688 million) from 570 million euros.

The low-cost airline met analyst forecasts with a profit of 602 million euros for six months to September as a fall of 2 percent in average fares was compensated by a 22 percent rise in extra charges.

But the airline said it would be forced to hold further seat sales during the winter to keep planes full.

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"The continuing fare and yield softness means that full year profits will be lower than previously guided," Chief Executive Michael O'Leary said in a statement.

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