Shares in Ryanair dropped more than 5 per cent yesterday as the low-cost airline surprised the market by warning that yields were under pressure and were likely to stay that way for the first and second quarters of the next financial year.
In a routine monthly traffic statement to the stock exchange yesterday, Ryanair chief executive Michael O'Leary said the load factor, or percentage of seats filled, fell to 83 per cent in April, from 85 per cent in the same month last year.
He attributed the decline in most part to the 21 per cent growth in capacity as the airline took delivery of 27 new aircraft and launched three new bases over the winter period.
However Mr O'Leary also blamed the higher airport charges at London Stansted and Dublin airport and said they had given rise to a softer yield environment.
"We expect this weakness in load factors and softer yields to continue through Q1 and Q2," he said.
Mr O'Leary has made no secret of his dislike of the higher charges being implemented by both the Irish and British governments.
British Chancellor Gordon Brown doubled the air passenger duty, a tax on flights, in February in an effort to curb carbon emissions, while closer to home the aviation regulator is currently assessing what increases the Dublin Airport Authority will be allowed to levy on airlines using the airport.
As many as 30 million Ryanair shares traded in Dublin yesterday, with a further 26 million changing hands in London.
Dealers said there was pretty good two-way interest throughout the day as the news prompted people to sell the stock, but then the price decline created some buying opportunities.
The shares fell as low as €5.78, before closing down 5.2 per cent, or 32 cent lower, at €5.80.
Stock market dealers said the news from Mr O'Leary had "spooked" the market, which had expected to hear good news from Ryanair following an upbeat third-quarter results announcement back in February.
One dealer said that the negative outlook by Mr O'Leary was his attempt to bring the forecasts of some analysts more into line with what the company is expecting.
Following the announcement, there are likely to be some forecast revisions over the next few days.
In the statement, Ryanair also said it carried just over 4.1 million passengers in April, a 19 per cent increase on the same month last year.
