Ryanair cautious on outlook as slumping fares weigh on earnings

  • Business
  • Tuesday, 21 May 2019

Ryanair sees risk to 2020 growth if 737 MAX grounded beyond November.

LONDON: Ryanair Holdings Plc said lower fares and losses at its new Austrian arm sent profit tumbling in fiscal 2019, and forecast that earnings could decline further this year.

Net income slumped 39% to 885 million euros (US$987mil) in the 12 months through March, Dublin-based Ryanair said in a statement, forecasting a figure of 750 million euros to 950 million euros for the current year.

Ryanair joins a chorus European carriers warning of tough months ahead as excess seating combines with high fuel prices and weakening economies to squeeze margins. Deutsche Lufthansa AG, the region’s biggest airline, has frozen capacity at its discount arm, while Thomas Cook Group Plc’s share price plummeted after analysts said the tour operator’s debt is greater than its value as demand stutters.

Ryanair chief executive officer Michael O’Leary said he’s “cautious” on prices this year, with zero visibility for the second half, which encompasses the winter season.

The company said first half bookings for the peak summer period are higher but that the earnings outcome would depend on last-minute fares and whether there’s any disruption from the UK leaving the European Union. The fuel bill is set to swell by 460 million euros, slightly ahead of last year’s increase.

For the year ended March, strong growth in ancillary revenue – such as booked seats and early boarding – was also offset by a 200 million-euro jump in staff costs, including a 20% pilot pay increase, as Ryanair grappled with a unionisation drive across its bases.

Europe’s biggest discount airline aimed to take delivery of Boeing Co’s grounded 737 Max jetliner from October once the planemaker returned the model to service after two recent crashes, chief financial officer Neil Sorahan said in an interview.

Five aircraft should be operational for the winter timetable, after being scheduled for delivery from April.

Ryanair shares are barely changed this year – a better performance than discount rival EasyJet Plc and network operators Lufthansa, Air France-KLM and IAG SA, which have all declined. — Bloomberg

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