DUBLIN - Ryanair cut its full-year profit forecast by five percent Tuesday due to the pound's slump since Britain voted in June to exit the EU, heaping more turbulence on a troubled sector.
Ryanair said it was cutting its 2016/17 profit after tax forecast by five percent to between 1.3 billion euros and 1.35 billion euros ($1.4 billion and $1.5 billion)
"The primary cause of this slightly lower growth in full year (net) profitability is the 18 percent fall of sterling post Brexit which will reduce second half average fares," the Irish no-frills airline said in a statement.
The pound's tumble is reducing the amount Ryanair earns from its key British market once the currency is converted into euros -- the unit of Ireland and which the Dublin-based airline uses to price its earnings.
Ryanair said it was cutting its 2016/17 profit after tax forecast by five percent to between 1.3 billion euros and 1.35 billion euros ($1.4 billion and $1.5 billion). Its financial year runs to the end of March.
Ryanair is not alone in being hit, with fierce rival EasyJet suffering a 40-percent dive in its share price since late June and warning that annual profits would slump by almost a third on Brexit and because of industrial action and unrest in key markets Egypt and Turkey.
British Airways-parent IAG has meanwhile lost nearly one-third of its share price value since June 23.
Elsewhere, British airline Monarch last week won a cash injection from its owner, allowing it to continue flying holidaymakers and fund growth plans.
Ryanair chief executive Michael O'Leary said Tuesday that "stronger traffic growth and better cost control" would contribute to offsetting the hit in revenues, adding that the British market represents about one-quarter of the group's total income.
Traders did not appear too surprised by the update, with Ryanair's share price down only 0.7 percent at 11.73 euros in Dublin morning deals.
"Ryanair's problem is a microcosm of Ireland's post-Brexit conundrum -- huge exposure to the UK market and sterling, but earnings booked in euros," said Neil Wilson, market analyst at ETX Capital.
"The airline derives 26 percent of its earnings in pounds, while around a third of Irish exports head to the UK."
The pound has tumbled to 7.5-year lows against the euro and 31-year troughs versus the dollar since Britain voted in favour of leaving the European Union, as markets price in future economic uncertainty.
The office of British Prime Minister Theresa May on Monday sought to downplay cabinet tensions over Brexit after reports her finance minister is antagonising colleagues with his warnings about the economic dangers.
Chancellor of the Exchequer Philip Hammond has reportedly been pushing to delay measures designed to control immigration, which would likely be viewed by EU leaders as incompatible with continued membership of the single market.
O'Leary has meanwhile previously said that Brexit uncertainty would more than halve Ryanair's UK growth.