Ryanair shares surge after it reports that profits grew 10% to €1.45bn

Ryanair shares surged on Monday after the airline reported that profits grew 10 per cent to €1.45 billion in the 12 months ended March 31st, 2018. The news came amid signs that the airline faces possible industrial action from pilot unions impatient with the pace of recognition talks.

The airline said that revenues for the period – its financial year – climbed 8 per cent to €7.15 billion from €6.65 billion during the corresponding 12 months in 2016/17. Profits after tax climbed 10 per cent to €1.45 billion from €1.32 billion, while passenger numbers swelled 9 per cent to 130 million.

Ryanair’s shares dipped in early trade in Dublin, but began climbing later on, ending the day 5.14 per cent up at €16.27.

Pilot groups, including the Irish Airline Pilots’ Association, part of trade union Fórsa, have written to the airline highlighting a number of issues relating to their terms and conditions. It is understood that unions intend to ballot for industrial action if the airline does not engage with them on the points raised.

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The company said it did not comment on negotiations with its workers.

Ryanair has been in discussions with labour groups since agreeing to recognise unions late last year. On Monday it said that it had made a promising start to talks, signing recognition deals with the British Airline Pilots' Association and Anpac in Italy. Ryanair added that it was also making progress with cabin crew negotiations.

Disruption

The airline grew its business last year despite disruption caused by a rostering failure that forced it to cancel flights in the autumn. However, the airline warned that profits for the current financial year could fall to between €1.25 billion and €1.35 billion as lower fares and higher fuel costs eat into margins.

Ryanair’s shares earned an average of €1.215 each during the period, compared with €1.053 last year. Its margins remained unchanged at 20 per cent.

Chief executive Michael O'Leary said: "We are pleased to report a 10 per cent increase in profits, with an unchanged net margin of 20 per cent, despite a 3 per cent fall in air fares during a year of overcapacity in Europe, leading to a weaker fare environment, rising fuel prices and the recovery from our September 2017 rostering management failure."

Mr O’Leary warned that Ryanair’s outlook for the current year was on the pessimistic side of cautious.

The airline believes passenger numbers will grow 7 per cent to 139 million, and that it will fill 95 per cent of the seats on its craft.

“Unit costs this year will rise 9 per cent due to higher staff and oil prices, which will, when adjusted for volume growth, add more than €400 million to our fuel bill.”

Mr O’Leary said that Ryanair planned to restrict non-EU shareholders’ voting rights in order to prepare the airline for a hard Brexit in March 2019.

Flight rights

He argued that despite a view that the EU and UK would agree an 18-month Brexit transition period from next March, Ryanair believed it was best to plan for a hard British exit from the bloc.

“In these circumstances it is likely that our UK shareholders will be treated as non-EU, and this could potentially affect Ryanair’s licensing and flight rights,” he said.

He explained that the company would have to restrict non-EU backers’ voting rights to ensure that it remained owned and controlled by EU shareholders at all times in order to comply with its licences.

EU law requires all airlines registered in member states to be majority owned by shareholders based in the bloc.

On average passengers paid €39.40 for their tickets, 3 per cent less than during the 2017 financial year.