Ryanair, Europe's largest low-cost airline, on Tuesday warned that it expects its annual net profit to fall by up to 125 million euros (138 million dollars), mainly due to a plunge in the pound since Britain's Brexit vote.
The airline said it expects net profit of 1.3 billion to 1.35 billion euros, down 5 per cent from a previous forecast of 1.375 billion to 1.425 billion euros, after the pound lost about 18 per cent of its value against the dollar since the Brexit referendum on June 23.
The fall in the British currency will reduce Ryanair's average fares by up to 15 per cent in the second half of this year, it said.
"While higher load factors, stronger traffic growth and better cost control will help to ameliorate these weaker revenues, it is prudent now to adjust full-year guidance, which will rise by approx 7 per cent rather than our original guidance of 12 per cent," Ryanair owner Michael O'Leary said in a statement.
"This decline is primarily due to the impact of weaker sterling on our H2 fares," O'Leary said, adding that the new forecast "remains heavily dependent upon no further weakness in sterling from its current levels."
Budget airline easyJet issued a similar warning earlier this month, saying its annual profit is likely to suffer a 90-million-pound hit from the plunging pound and further impact from a fall in passenger numbers caused by security fears.