Ryanair posted an 85 percent fall in first-quarter net profit on Monday as its fuel bill almost doubled and warned it could make a full-year loss of up to 60 million euros if oil prices stayed high and fares fell.
Europe's largest low-cost carrier said adjusted profit after tax for the three months to the end of June had come in at 21 million euros ($33 million).
That compared with a net income forecast of 48.8 million euros by brokerage Davy.
Ryanair said it had made use of a recent fall in oil prices and hedged 90 percent of its fuel needs for September at $129 per barrel, 80 percent for the third quarter at $124 per barrel, but remained unhedged for the fourth quarter.
Ryanair said first-quarter revenues grew by 12 percent to 777 million euros. That was well below the 865.4 million average of five forecasts in a Reuters survey and lower than the most cautious of the five analysts, who predicted 836.4 million.
The Dublin-based carrier said consumer confidence was plummeting in an emerging recession in the UK and Ireland, which it planned to respond to by cutting fares more aggressively than competitors.
"The outlook for the remainder of the fiscal year which is entirely dependent on fares and fuel prices remains poor," O'Leary said.
He reiterated however that Ryanair's more than 2.2 billion euros in cash will help it weather the industry downturn and anticipates a strong rebound in earnings as rivals with higher costs or less assets suffer.