Canceled flights fail to stop Ryanair growth
May 21, 2018
Ryanair, Europe's biggest low-cost airline, announced on Monday that its net profit had risen 10 percent in the last financial year despite a pilot-rostering crisis that led it to cancel thousands of flights.
The Irish carrier announced that had it achieved a 9 percent increase in passengers, to 130 million, which led net profit to soar to a record €1.45 billion ($1.7 billion) in the year to March 31.
"We are pleased to report a 10 percent increase in profits, with an unchanged net margin of 20 percent, despite a 3 percent cut in airfares, during a year of overcapacity in Europe," Ryanair's CEO, Michael O'Leary, said in a statement.
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Oil prices higher
He said the successes had come despite rising fuel prices and last September's rostering failure. Oil prices hit a bottom of $30 in 2016 and have since climbed back to almost $80 per barrel.
Ryanair warned that, in the current financial year, it expected profit after tax to fall to between €1.25 and €1.35 billion as higher oil prices begin to feed into its operating costs.
"Fuel will be a major cost headwind for the next 24 months," the company said. But it said it still expected to "grow traffic by seven percent to €139 million."
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The budget carrier identified Germany, Italy and Spain as the three largest growth markets, despite intense competition in these countries from the likes of Easyjet, Eurowings and Vueling.
'More airline bankruptcies due'
O' Leary's statement described the outlook for 2018/19 as being "on the pessimistic side of cautious." He later predicted that some of his European rivals would go bankrupt over the next few months.
"Those airlines that couldn't make money when oil was at $40 a barrel last year, I don't think will survive this winter when oil remains up at these elevated levels," he told CNBC.
Ryanair's winter cancellation crisis was caused by a rostering debacle alongside rumors that pilots were leaving the budget carrier in their droves. Some 20,000 flights were cancelled between October and February.
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New pay deals
The airline later struck new five-year pay deals with most of its pilots and cabin crew. It still needs to reach agreements with unions in Ireland and Spain.
Ryanair's shares opened up nearly 3 percent in London on Monday with investors playing down the impact of higher fuel and staff costs for the next financial year.
"We believe Ryanair's industry-leading competitive advantage remains and thus see no reason to change our 12-month 'outperform' rating," said Davy Research analysts.
mm (AFP, Reuters)