Published: Wed, May 22, 2019
Markets | By Otis Pena

Ryanair blames low fares for 40% profits nosedive | Ireland

Ryanair blames low fares for 40% profits nosedive | Ireland

The new jets would have added 4 per cent more seats, 16 per cent fuel efficiency and delivered "significant" cost savings for the airline in the next five years.

Ryanair reported full-year 2019 profit of €1.02bn, representing a 29% decline compared with the previous year, driven by lower fares.

It said: "This will range from €750m (£660m) if RPP rises 2%, up to 950 million euros (£830m) if RPP rises 4%".

The company had forecast a profit of between €1 billion and €1.1 billion, and a company poll of over 10 analysts published ahead of the release had forecast €1.03 billion.

Ryanair handled a total of 139.1 million passengers in FY2019, almost nine million people more than the 130.3 million passengers it handled in the previous fiscal year, said the press release, adding that the number of passengers handled by Ryanair in the period totaled 142 million if Lauda is included. Davy Stockbrokers said it would cut its forecast by 9 per cent but believed that the "nadir point" had likely been reached. O'Leary said the price of fares will keep falling in Germany and the UK.

Several rival airlines have warned of a worse trading environment - partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.

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Analysts credited the result also to a simple coalition platform centering on promises of keeping taxes to a minimum. Morrison could be the first prime minister in more than a decade to complete his term.

Shares in the budget airline fell by 6% this morning after it revealed its fall in profitability by nearly a third.

China Eastern Airlines has filed a claim seeking compensation from Boeing over the grounding and delayed delivery of 737 MAX aircraft following two deadly crashes, an airline spokesman confirmed Wednesday.

Strong 7% traffic growth was offset by a 6% decline in fares. O'Leary said he was "reasonably confident" it would have around 50 MAX aircraft flying next summer. But it expects to fly 153 million passengers in the year to March 2020 up from 139 million this year. The delay contributed to an expected 2 per cent increase in non-fuel costs in the coming year, it said.

Ryanair's board has also approved a €700m share buyback which will commence later this week and run over the next year.

Profits fell at the firm's Austrian airline Laudamotion, and it had to spend 28 per cent more on staff salaries - costing it £829 million - after a series of deals with unions to avert strikes.

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