RYAAY Ryanair Holdings PLC

LONDON—Ryanair Holdings PLC on Wednesday said a further deterioration in fares during the winter period could threaten the airline's full-year guidance after slightly higher passenger numbers in the summer offset a sharper-than-expected drop in ticket prices.

Europe's largest airline by passenger numbers last month reaffirmed its earnings outlook for full-year profit in the range of €1.375 billion euros ($1.53 billion) to €1.425 billion, though it said it harbored risk. Ryanair expects to transport 117 million passengers in the financial year ending March 31, up one million from its initial projection.

Chief Executive Michael O'Leary warned, however, that if fares in the October-through-March period fall more than the 10% to 12% projected, the target could be at risk: "If it gets worse than that we will have to adjust our full-year guidance."

Mr. O'Leary said fares in the April-through-September period are down 9%, more than the 6% to 8% decline previously expected. Cost savings and stronger traffic numbers are keeping the Dublin-based airline on track to meet its profit target.

There is still much uncertainty over winter bookings, he said.

Other European airlines have issued a profit warning in recent months, blaming demand weakness from terrorism and the effect of the British referendum in June to leave the European Union.

Ryanair on Wednesday said it planned to grow U.K. capacity next year by around 6%, down from the 15% growth this year. Mr. O'Leary said the drop was driven by the so-called Brexit decision.

The airline had planned to base 10 more planes in the U.K. next year and now will position them elsewhere. Most of the capacity will instead go into Germany, Poland, Italy, Spain and Portugal, Mr. O'Leary said.

The Brexit vote has put into question traffic rights that Ryanair and other European carriers use to fly freely across the EU. Mr. O'Leary said issues that need to be resolved go beyond traffic rights and include how to deal with British shareholders in European companies. The EU requires its carriers to be majority-owned by Europeans.

Mr. O'Leary said the airline should see further benefit from lower fuel costs next year. The airline's fuel bill this year should be €200 million below the prior year and fall another €150 million in the financial year starting April 1.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

August 31, 2016 08:35 ET (12:35 GMT)

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