O’Leary stresses risks as Ryanair profit dips nearly 30% to €1.02bn
Chief executive says airline could earn €750 million to €950 million profit next year
Ryanair chief executive Michael O’Leary said bookings for the first half, which ends on September 31st, are slightly up. Photographer: Christopher Goodney/Bloomberg
Ryanair’s €1.02 billion after-tax profit for the 12 months ended March 31st – its 2019 financial year – was in line with the airline’s prediction in autumn 2018, but at the lower end of the €1 billion to €1.1 billion range it pitched at the time.
The number was down almost 30 per cent on the €1.45 billion that Ryanair earned during its 2018 financial year, mainly due to a 6 per cent fall in fares. Other factors, such as increased fuel costs and passenger compensation for strike cancellations, also contributed to the fall.
Given that they knew six months ago what to expect, Ryanair investors are presumably more interested in what will happen this year. According to Michael O’Leary, the carrier’s chief executive, bookings for the first half, which ends on September 31st, are slightly up, while the company believes it will fly 153 million passengers in the 12 months to March 31st, 2020, an 8 per cent increase.
Fares are down and O’Leary says they will stay down through the summer. Nevertheless, passengers could spend more on extras such as priority boarding, pushing revenue from each up a few per cent. On the downside, fuel will cost an extra €460 million while other expenses will inch up 2 per cent.
These factors left O’Leary saying that Ryanair could earn €750 million to €950 million profit next year, depending on summer fares booked close to passengers’ travel dates, prices in the second half of the year, no security events and no negative Brexit developments.
As ever, he was keen to remind markets of the risks out there. Industrial relations is another. The British Airline Pilots’ Association is reportedly weighing an indicative ballot on industrial action. While that is some way from an actual strike, it means that since Ryanair agreed to recognise unions it cannot rule out such events.
Ryanair’s shares fell 4.63 per cent to €10.305 following the news. That will have disappointed anyone who last Friday helped to push the stock up 1.41 per cent to €10.805 after the Irish carrier’s rival EasyJet announced good passenger growth.