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The chill wind in the airline sector

Ryanair has today confirmed that competition in the sector and price reductions will see net profits for the full year come in at around £173 million, which is very much at the bottom end of analyst expectations. The company has blamed increased competition in the sector as airlines battle for the smaller passenger pie with traffic figures still very subdued to say the least.

The company has itself reduced ticket prices by 13% over the last quarter and while the figures reported today were impressive there is concern that the full-year figure may come under more pressure. The second quarter figures were significantly buoyed by reduced fuel costs although the shine of this particular benefit has been taken away by concern for the full year. When you consider so-called economy airlines such as Ryanair are struggling and the likes of British Airways are literally trying to save every pound they can, the short to medium-term outlook for the sector is turbulent to say the least.

The airline sector is one which has shown impressive growth over the last 20 years although it is also one which has attracted significant attention from the authorities, who have slapped various green taxes on the sector in the name of the environment.

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