Business

Ryanair expects average fares to fall 6%

Ryanair plane Image copyright Getty Images

Ryanair has increased its forecast for the fall in average fares this quarter from 4% to 6%.

The announcement came with results for the last three months of 2015, when average fares fell by 1%.

Net profits for the quarter doubled to €103m ($112m; £78m), from €49m in the same period of 2014.

Ryanair maintained its profit forecast for the full year. It expects falling fares to be balanced by an increase in passenger numbers.

Ryanair has also announced it's going to buy back €800m euros ($867m; £609m) of its own shares.

Companies use share buybacks as a way to increase the value of the remaining shares.

The airline raised its profit forecast in September, but was then forced to lower average fares to sell tickets after the attacks in Paris in November.

Fuel effect

It has been taking advantage of lower oil prices to reduce costs in future years.

Ryanair has hedged 95% of its fuel requirements for 2017 at $62 a barrel, and half of its requirement for 2018 at $52 a barrel.

It said it would pass on those savings in the form of lower fares this year and next.

Ryanair's costs fell by 5% in the last three months of 2015, or by 1% if falling fuel prices are excluded. Fuel makes up 40% of the airline's costs.

Ryanair uses what it calls a "load factor active/yield passive" model, which means that it will cut fares as much as is necessary to keep its aircraft full.

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