Budget giant Ryanair issued a profits warning on Monday, cutting its forecast earnings for the financial year by more than 10%, and said further warnings “can’t be ruled out”.
Ryanair re-forecast its profits for the 12 months to March at €1.10 billion-€1.20 billion against the €1.25 billion-€1.35 billion previously projected.
It blamed the profits downgrade on recent strikes by Ryanair pilots and cabin crew across Europe and consumer fears of further industrial action, as well as increased fuel prices.
The carrier’s share price fell by 11% following the announcement and has fallen almost 30% this year.
Ryanair reported a profit of €1.45 billion for the 12 months to March 2018.
The airline said it would cut 11 aircraft from its fleet for the second half of the financial year and shut bases in Eindhoven, Bremen and Niederrhein, reducing capacity by about 1%.
However, Ryanair still expects to carry 138 million passengers over the 12 months.
Chief executive Michael O’Leary warned further profit warnings were possible.
He said: “Ryanair cannot rule out further disruptions in Q3, which may require full-year guidance to be lowered further and may necessitate further trimming of loss-making winter capacity.
“While we successfully managed five strikes by our Irish pilots this summer, two recent coordinated strikes by cabin crew and pilots across five EU countries has affected passenger numbers, close-in bookings and yields.”
O’Leary insisted: “We have on both strike days operated over 90% of our schedule. However, customer confidence, forward bookings and Q3 fares have been affected, most notably over the October school mid-term [holidays] and Christmas.”
He added: “These strikes have added to our EU261 [air passenger compensation] costs while at the same time our unhedged fuel costs have jumped.
“Like a number of other EU airlines, we have decided to trim our winter 2018 capacity in response to this lower fare, higher oil and higher cost environment.”
O’Leary subsequently told journalists: “Do we have to trim guidance again for the year? We hope we don’t have to, but it can’t be ruled out.”
The Ryanair chief insisted: “Since Ryanair agreed to recognise unions in December 2017, we have made substantial progress with our union negotiations in major markets including Ireland, the UK, and Italy, where we have signed multi-year collective labour agreements with pilots and cabin crew.
“Such progress has been impeded in Spain, Portugal, Germany, Holland, and Belgium.”
He claimed this was due to “interference in negotiations with our people and their unions”.
Ryanair has agreed union deals covering more than 2,000 pilots in the UK, Ireland and Italy, but unions representing almost 2,200 flight crew across Europe remain unrecognised.
It was a mess-up over pilot rostering last autumn which led to thousands of flight cancellations that pushed Ryanair to reassess its relations with pilot unions.
The airline had previously refused to recognise or negotiate with flight or cabin crew unions.
O’Leary said this week: “We will ultimately be unionised. I have accepted that as reality.”
But he added: “For as long as we can postpone unionisation, we would try to postpone unionisation.”
Aviation analyst Andrew Lobbenberg of HSBC told business newspaper the Financial Times: “The employment practices of Ryanair were unique and, it appears now, not sustainable.”
He suggested the union agreements meant Ryanair’s “unit costs will still be very good, but the gap will narrow”.
Issuing the profits warning, O’Leary said: “Shareholders should note that the guidance excludes start-up losses in Laudamotion of approximately €150 million.”
Ryanair acquired a 75% stake in Austrian carrier Laudamotion, launched this year from the remnants of Air Berlin-owned Niki.
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