Another profit warning from Ryanair

Ryanair has said it is set to make less annual profit – for the first time in five years.

The low-cost carrier is now forecasting it will make around 510 million euros for the year ending next March. That is down from a previous prediction of 570 million euros.

This latest profit warning comes as intense competition in Europe pushes average fares down by around 10 percent over the winter months.

Europe’s largest airline in terms of passenger numbers has also said it would halve some baggage charges and allocate all seats on its planes, thereby ending often frenzied rushes by passengers to secure the best places.

It is also slashing the fee for reprinting boarding passes and allowing a small second carry-on bag for free.

Chief Executive Michael O’Leary remained in typically ebullient mood, saying that passenger numbers and on-board spending are strong but that there is weak demand for air travel across Europe.

“People are characterising this as ‘what’s gone wrong?’ Nothing! We are booming ahead,” he said in a conference call, citing October passenger numbers up six percent from a year ago.

“There is a weaker pricing environment out there. Get over it. Wherever that pricing falls, it will be significantly below what our competitors can withstand.”

O’Leary said that he expects the weakness to prove temporary, but conceded that a “catastrophic” fall in pricing over the coming year could force the company to reconsider a promised share buyback due by the end of 2015.