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Ryanair full-year profits up 10% despite scandal

The airline comments on overcapacity in Europe and the impact of both Brexit and higher costs.

Ryanair has posted a 10% rise in full-year net profits to €1.45 billion – despite last year’s scandal over pilot rostering.

Average fares fell 3% to €39.40, which the budget carrier said stimulated 9% traffic growth to more than 130 million passengers, with Germany, Italy and Spain the three largest growth markets, TTG reports. Load factor was 95%.

“We are pleased to report a 10% increase in profits, with an unchanged net margin of 20%, despite a 3% cut in air fares, during a year of overcapacity in Europe,” commented chief executive Michael O’Leary.

This overcapacity, he added, is “leading to a weaker fare environment, rising fuel prices and the recovery from our September 2017 rostering management failure.”

Ryanair expects above-average European Union capacity growth to continue into 2019, “which will have a downward effect on fares”.

“This may be partly ameliorated by the switch of some charter capacity back to previously security challenged markets such as Turkey and Egypt,” the airline added.

“We expect, later in the year, some upward pressure on pricing as significantly higher oil prices impact margins, especially those EU airlines who continue to expand despite having no prospect of achieving profitability.

“Ryanair will continue to pursue our load factor active/yield passive strategy. No other EU airline can compete with Ryanair’s prices.”

Hard Brexit
However, Ryanair says it remains concerned about the impact of a possible hard Brexit.

“While there is a general belief that an 18-month transition agreement from March 2019 to December 2020 will be implemented and further extended, it is in the best interest of our shareholders that we continue to plan for a hard Brexit in March 2019,” it said.

In these circumstances, it is likely that the carrier’s UK shareholders will be treated as non-EU and this could potentially affect Ryanair’s licencing and flight rights.

“Accordingly, […] we intend to restrict the voting rights of all non-EU shareholders in the event of a hard Brexit, so that we can ensure that Ryanair is majority owned and controlled by EU shareholders at all times to comply with our licences.”

The airline has also applied for a UK AOC, which it hopes to receive before the end of 2018.

Pessimistic outlook
Ryanair’s outlook for full-year 2019 is “on the pessimistic side”. Although it expects to grow traffic by 7% to 139 million, it expects unit costs to rise by 9% due to higher staff and oil prices.

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