Ryanair chief executive Mr Michael O'Leary said today there would be no ceasefire in the fares war in Europe as Europe's biggest no-frills airline expected its average fare to fall between 5 and 20 per cent this year.
Full-service airlines would remain under pressure and some smaller budget carriers in Britain and Germany could be casualties in the cut-throat competition, said Mr O'Leary, pointing to past failures in the US discount airline market.
"The casualties are going to come from the ones that are losing money," Mr O'Leary told reporters, adding it would be tough for some of the smaller carriers to survive this winter.
Shares in Ryanair were down 2 per cent at 4.96 euros this morning, after having lost nearly a third of their value at the end of January after the carrier shook investors with its first profit warning since it was founded 19 years ago.
Mr O'Leary said Ryanair was keeping its January guidance for a net profit of around €215 million for the year just ended to March 31st but its average fare was expected to decline by between 5 and 20 per cent this year.
"If it is minus five per cent we will make a small increased profit over the next 12 months. If it is as bad as minus 20 per cent we will be at breakeven for the next 12 months," he said.
Ryanair said in January that annual profits for 2003/04 could fall by as much as 10 per cent as it slashed ticket prices to fill seats on a rapidly expanding network. Competition from rivals and the euro's strength were also hurting its business.
Ryanair pledged last week to keep using Belgium's Charleroi Airport, setting aside a threatened pull-out after the European Commission ordered it to repay the local government €4 million because the cheap landing charges it received from the state-owned airport had not been available to rival airlines.
Mr O'Leary said that after Ryanair had calculated the costs of its marketing for routes to Charleroi the repayment would be less than €1 million. The existing airport and baggage handling charges at Charleroi were not changed.