Ryanair retains profit forecast despite economic turbulence

Ryanair retains profit forecast despite economic turbulence

Ryanair today maintained its guidance on full year profits despite turbulence from air traffic control strikes, terrorist attacks in Europe and a weaker pound post Brexit. 

Europe’s largest budget carrier forecast annual profits to rise by around 12% to as much as €1.425 billion. But there will be a downward pressure on fares until at least the end of 2017, chief executive Michael O’Leary predicted.

 "We caution that post Brexit there are significant risk to the downside during the remainder of the year,” he added.

O’Leary followed Wizz Air in saying the airline would “pivot our growth away from UK airports and focus more on growing at our EU airports over the next two years”.

Capacity and frequency on many Stansted routes will be cut this winter although no routes will close.

O’Leary, a vocal campaigner for the UK for remain as part of the European Union, disclosed that peak summer fares are expected to fall by at least 6%.

“Average fares on close-in bookings have been adversely impacted by ATC strikes, terrorist events and weaker sterling post Brexit,” he said.

The airline is 1% better booked for the July-September quarter than at this time last year but at “significantly lower” fares.

Annual passenger carryings are still expected to grow by 10% to 117 million – up 1 million on previous guidance.

The projection came as Ryanair revealed a “modest” 4% rise in net profits to €256 million for the three months to June 30, with carryings up by 11% to 31.2 million.

The increase came as average fares in the airline’s first quarter fell by 10% year-on-year to €39.92.

“The absence of Easter in Q1 and on-going market volatility arising from terrorist events, and repeated ATC strikes - particularly in France - weakened fares on close-in bookings and caused almost 1,000 flight cancellations,” O’Leary said.

The level of cancelations was below those reported by rival easyJet as it issued a profits warning last week.

But O’Leary admitted Ryanair’s quarterly on-time performance fell in from 91% last year to 87% due to thunder storms and a succession of “unjustified ATC strikes” in Belgium, Italy, Greece and especially in France.

“UK NATS has also mismanaged its staffing rosters leading to repeated slot capacity restrictions and delays at Stansted,” he added.

The airline has contingency pans in place “for all eventualities” following uncertainty triggered by the UK vote to leave the European Union, O’Leary revealed.

“In the near term we expect that Brexit uncertainty will lead to weaker sterling, slower growth in the UK and EU economies and downward pressure on fares until the end of 2017 at least,” he said.

“Over the longer term, if the UK is unable to negotiate access to the single market/open skies it may have implications for our three UK domestic routes and UK nationals on our share register but these risks are not material and will be manageable.

“There may also be some opportunities if our UK registered competitors are no longer permitted to operate intra EU routes, or must divest their majority ownership of EU registered airlines.”


This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.

More in News