Ryanair reported a 21 per cent drop in quarterly profit on Monday as price wars in several European markets drove ticket prices lower, but it stuck to its annual profit target as passengers continued to spend on onboard extras.

Average summer fares at Europe’s largest low-cost carrier will likely fall by 6 per cent compared to last year, as airlines cut prices to stimulate demand, particularly in Germany and the United Kingdom, the airline said. That helped push profit after tax down to 243 million euros ($270.36 million) for the three months to June 30 from 309 million in the same period last year, slightly ahead of an analyst poll forecast of 232 million euros.

Ryanair’s shares were up by 1.2 per cent at 0845 GMT, having almost halved in value in two years as the Dublin-based airline grappled with overcapacity, pilot strikes, Britain’s plans to leave the European Union and delays in the delivery of the grounded Boeing 737 MAX.

Earlier this month Ryanair halved its growth targets for next year due to the 737 MAX delays.

But on Monday it reiterated its profit forecast for the year to March 31, 2020 of between 750 million euros and 950 million euros, saying demand for optional extras like pre-booked seats and on-board refreshments was strong. Ahead of the results, a company poll of analysts showed an average forecast of 832 million euros profit for the year.

“The June quarter results were not quite as bad as feared,” Liberum analyst Gerald Khoo said in a note. “Current FY consensus is already in the bottom half of management’s guidance range, but there may be some slippage as higher estimates are reined in.

Reuters