Is Ryanair crying wolf again?

Another impressive set of full-year results from Ryanair (ISE: RYA), another warning from chief executive Michael O'Leary. Announcing pre-tax profits up 33% to a record e451m for the year, Ryanair's share price nonetheless slid by 7% as O'Leary warned that profit growth could fall to 5% this year. Average fares rose by 7% and passengers jumped by 22% to 42.5 million in the past year, but yields (revenue per seat) have recently come under pressure amid softening demand. O'Leary puts this down to a range of factors, including higher interest rates and air passenger duty and "swingeing airport charges".

Ryanair results: What the commentators said

Take O'Leary's gloomy forecast with a pinch of salt, one fund manager told The Irish Times. "This time last year, Ryanair swore blind that profit growth would be 5%-10% at best and it might even struggle to make that. As the year progresses, O'Leary is likely to become more upbeat."

Ryanair plans to slash fares, open new routes and start a fare war, thus keeping passenger numbers growing by over 20% this year. And with the lowest costs of any airline in Europe, "18% after-tax margins being the envy of the industry", it should suffer less than its rivals, said Alistair Osborne in The DailyTelegraph.

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Ryanair has the best business model and balance sheet in the industry, and its strategy of meeting softer demand with a fare war has worked before, said Lex in the FT. But "industry headwinds are building". The airline faces weakening demand, maturing low-cost markets and aggressive competition, as well as "an unfavourable regulatory regime". This may be the first time O'Leary's downplayed expectations prove accurate.

RYA: e5; 12m change 50%