By Conor Humphries
DUBLIN (Reuters) - Ryanair said a further drop in the value of sterling has forced it to cut its forecast for full-year profit by 5 percent, adding that average fares could fall more sharply this winter.
Europe's largest low-cost airline, which depends on Britain for around a third of its revenue, said an 18 percent slide in the pound against the dollar following the country's vote to leave the European Union, will cut fares by between 13 percent and 15 percent.
Chief Executive Michael O'Leary said the reduced forecast "remains heavily dependent upon no further weakness in second-half fares or sterling from its current levels."
Ryanair said it expects net profit for the year to March 31 of between 1.3 billion euros (1.19 billion pounds) and 1.35 billion euros, down from a previous forecast of 1.375 billion euros to 1.425 billion euros.
The mean forecast of 16 analysts polled by Reuters ahead of the profit warning was 1.383 billion euros.
Shares in Ryanair were down 0.6 percent at 11.73 euros by 0748 GMT, and are down around 14 percent since June's vote to leave the EU.
Rival easyJet (LON:EZJ), which depends on the UK for around half of sales, has already cut its profit forecast by a quarter for the year to Sept. 30 in the wake of the Brexit vote.
British airline Monarch last week was kept alive by a 165 million pound bailout from investors, having warned in September that security concerns and the devaluation of the pound had made market conditions difficult.
But the lower fares will allow the airline to increase passenger numbers to 119 million from an earlier forecast of 117 million, piling further pressure on competitors.
Ryanair's policy is to maintain passenger numbers whatever the fare and then earn money on extras such as fees for choosing seats and on-board refreshments.
"Tough trading conditions are an opportunity to make strategic progress at the expense of weaker competitors," Liberium analyst Gerald Khoo said in a note.
He said the warning was not a surprise as the company had already indicated there were risks to the downside, adding that the valuation more than adequately reflected the uncertain economic outlook.
Ryanair said fares in the six months to the end of September were also weaker than expected, falling 10 percent, but that this was offset by better than expected cost performance.
Costs per seat net of fuel will fall by 3 percent in the year, down from an earlier forecast of a 1 percent drop.
