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Ryanair profits fall as CEO predicts grim winter for aviation Ryanair profits fall as CEO predicts grim winter for aviation
(35 minutes later)
The Ryanair chief executive, Michael O’Leary, said he expected more airlines to go bust as the budget carrier posted a 7% drop in profits because of rising fuel prices and strikes hitting costs and bookings. The Ryanair chief executive, Michael O’Leary, has said he expects more airlines to go bust, as the budget carrier posted a 7% drop in profits because of rising fuel prices and strikes hitting costs and bookings.
O’Leary predicted a grim winter for the aviation industry, with oil prices, interest rates and the US dollar rising, and air fares falling. O’Leary predicted a grim winter for the aviation industry, with oil prices, interest rates and the US dollar rising and air fares falling.
He said Ryanair was better hedged than most rivals against the rise in oil prices, adding: “It is inevitable that more of the weaker, unhedged, European airlines will fold this winter.” He said Ryanair was better hedged than most rivals against the rise in oil prices, adding: “It is inevitable that more of the weaker, unhedged European airlines will fold this winter.”
Several smaller airlines have collapsed in recent weeks, including the Cypriot carrier Cobalt last week, the Danish carrier Primera Air and the Swiss airline SkyWork. The UK regional airline Flybe warned of mounting annual losses last week, blaming weaker consumer demand and higher fuel prices.Several smaller airlines have collapsed in recent weeks, including the Cypriot carrier Cobalt last week, the Danish carrier Primera Air and the Swiss airline SkyWork. The UK regional airline Flybe warned of mounting annual losses last week, blaming weaker consumer demand and higher fuel prices.
Larger airlines are not immune to this, with many closing bases and cutting routes to minimise winter losses, Ryanair noted. Larger airlines were not immune to this, with many closing bases and cutting routes to minimise winter losses, Ryanair noted.
The Irish carrier, Europe’s biggest budget airline, reported a fall in net profits to €1.29bn (£1.1bn) in the six months to 30 September, with its average fare down 3% to less than €46.The Irish carrier, Europe’s biggest budget airline, reported a fall in net profits to €1.29bn (£1.1bn) in the six months to 30 September, with its average fare down 3% to less than €46.
Revenues rose 8% to €4.4bn. However, costs rose, by 7% excluding fuel, following 20% pay increases for pilots, and additional costs for staff training and cancellations and delays caused by strikes. Ryanair’s share price was up 5% at lunchtime on Monday. Revenues rose 8% to €4.4bn. However, costs rose by 7% excluding fuel, after 20% pay increases for pilots and additional costs for staff training and cancellations and delays caused by strikes. Ryanair’s share price was up 5% at lunchtime on Monday.
The company already cut its forecast for full-year profits by 12% last month. It has been hit by a wave of strikes by pilots and cabin crew across Europe, which pushed up compensation costs and caused a spike in cancellations of higher-fare weekend flights. Ryanair said 2018 would also be the worst year on record for European air traffic control strikes. The company cut its forecast for full-year profits by 12% last month. It has been hit by a wave of strikes by pilots and cabin crew across Europe, which pushed up compensation costs and caused a spike in cancellations of higher-fare weekend flights. Ryanair said 2018 would be the worst year on record for European air traffic control strikes.
O’Leary told Bloomberg TV if the UK crashed out of the European Union without a deal next April “flights would be grounded … [and] the government would fall”. O’Leary told Bloomberg TV that if the UK crashed out of the European Union without a deal next April “flights would be grounded … [and] the government would fall”.
However, while the risk of a hard, no-deal Brexit was rising, he thought it was still unlikely and said a 21-month transition period to December 2020 was the most likely scenario. However, while the risk of a no-deal Brexit was rising, he thought it was still unlikely and said a 21-month transition period to December 2020 was the most likely scenario.
He also said if the board wanted him to stay for another two to three years he would do it but would not stay for another five years as CEO. He also said if the board wanted him to stay as chief executive for another two to three years he would do so, but he would not stay for another five years.
The aviation consultant John Strickland said Ryanair was going through a period of significant change, describing the airline’s acceptance of pilots’ unions last December for the first time in its 32-year history as a “massive change in their culture”. John Strickland, an aviation consultant, said Ryanair was going through a period of significant change, describing the airline’s acceptance of pilots’ unions last December for the first time in its 32-year history as a “massive change in their culture”.
Strickland said the decision to use the chief operating officer, Peter Bellew, as the lead negotiator with the unions, rather than the outspoken O’Leary, signalled a “less combative, more human approach”. He said the decision to use the chief operating officer, Peter Bellew, as the lead negotiator with the unions, rather than the outspoken O’Leary, signalled a “less combative, more human approach”.
However, John Moore, head of industrial relations at the British Airline Pilots’ Association, said earlier this month “things will only improve if there is regime change” at the top. However, John Moore, the head of industrial relations at the British Airline Pilots’ Association, said this month “things will only improve if there is regime change” at the top.
Neil Wilson, the chief market analyst at Markets.com, said: “Airlines are generally facing serious headwinds from a stronger dollar, higher oil prices and rising interest rates – Ryanair is less critically exposed to all of those but the strikes and unionisation are dragging it into the mire. The key question is whether management can sort out strikes before customers completely lose faith.” Neil Wilson, the chief market analyst at Markets.com, said: “Airlines are generally facing serious headwinds from a stronger dollar, higher oil prices and rising interest rates. Ryanair is less critically exposed to all of those but the strikes and unionisation are dragging it into the mire. The key question is whether management can sort out strikes before customers completely lose faith.”
Ryanair is facing calls for a boycott on Twitter after a racist incident on one of its flights, which it has referred to Essex police.Ryanair is facing calls for a boycott on Twitter after a racist incident on one of its flights, which it has referred to Essex police.
The airline faces criticism that it did little to prevent a male passenger inflicting a tirade of racist abuse on a 77-year-old woman. Ryanair apparently did not remove the passenger from the flight from Barcelona, instead moving the woman from her seat. The airline faces criticism that it did little to prevent a male passenger from inflicting a tirade of racist abuse on a 77-year-old woman. Ryanair apparently did not remove the passenger from the flight from Barcelona, instead moving the woman from her seat.
Ryanair said: “We have reported this to the police in Essex and as this is now a police matter; we cannot comment further.” Ryanair said: “We have reported this to the police in Essex and as this is now a police matter we cannot comment further.”
RyanairRyanair
Airline industryAirline industry
Michael O'LearyMichael O'Leary
EuropeEurope
IrelandIreland
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