Ryanair on Monday said it was “cautious” about the outlook for the last two months of its financial year and reiterated its plans to reduce its growth rate in the UK as it reported fares and profits for the October to December quarter fell more than expected.

The airline, Europe’s biggest low-cost airline, stood by its previous guidance that post-tax profits for the year to March 31 would be in a range from €1.3bn to €1.35bn but said the guidance depended heavily on the absence of “security events” affecting close-in bookings.

The company made the projection as it announced figures for the quarter to the end of December reflecting a 17 per cent year-on-year fall – to €33 – in the average fare per passenger. The figure was slightly sharper than the 13 to 15 per cent decline that Ryanair had forecast for the second half of its financial year. The decline pushed down post-tax profits for the quarter 8 per cent to €95m, on revenues that increased 1 per cent to €1.34bn.

The profit figure fell just short of the consensus expectation of €99m post-tax profits.

Michael O’Leary, chief executive, said the airline’s fares over the winter had fallen sharply as Ryanair continued to increase both its traffic and the proportion of its aircraft operating full. Passenger traffic was up 16 per cent on the same quarter the previous year. The falling yields had been exacerbated by the sharp decline in Sterling following June’s vote to leave the European Union.

“Ryanair responded to this weaker environment by continuing to improve our ‘always getting better’ customer experience, cutting costs, and stimulating demand through lower fares, which has seen load factors jump to record levels,” Mr O’Leary said.

Like many European airlines, Ryanair faces a market where excess capacity has helped to drive down fares, jihadi violence in several countries has hit passenger confidence and air traffic control disruption has grown worse. The airline, however, has pushed ahead with expansion, betting that its lost cost-base would enable it to withstand the resulting decline in fares better than rivals.

As well as sounding cautious about the remainder of the current financial year, Ryanair said that pricing would continue to be “challenging” in the year starting in March.

“We will respond to these adverse market conditions with strong traffic growth and lower unit costs,” Mr O’Leary said.

Mr O’Leary forecast that the company’s strategy of cutting fares to keep its aircraft full would win market share.

Ryanair also warned that the UK’s EU Brexit process represented a challenge for the business for the current and next financial year.

“We expect Sterling to remain volatile for some time and we may see a slowdown in economic growth in both the UK and Europe as we move closer to Brexit,” Mr O’Leary said.

Ryanair has previously said it would reduced its planned growth at UK airports and shift new capacity to mainland European markets such as Germany. Mr O’Leary reiterated those plans.

“While there may be opportunities to expand at certain UK airports, we expect to grow at a slower pace than previously planned in the UK and will continue to switch capacity into other key markets around Europe,” he said.

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