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Ryanair posts €20mn loss amid “weak” fares

A 26% rise in ancillary revenues to €557 million was offset during the third quarter by higher fuel and staff costs.

Ryanair posted a €20 million third-quarter loss this morning, weighed down by weaker fares that it expects to continue throughout 2019, the news agency Reuters reports.

The latest quarterly figures mean profit for the full year to the end of March will fall by up to 31%, the carrier thinks, due to the damaging strikes last summer, higher oil prices and short-haul overcapacity in Europe. A further downgrade cannot be ruled out, it warns.

Traffic growth of 8% to 32.7 million passengers during the quarter was offset by a 6% fall in average fares, while a 26% rise in ancillary revenues to €557 million was offset by higher fuel and staff costs. Total revenues rose 9% to €1.53 billion.

Short-haul overcapacity is behind the fare environment, it says in its results statement.

“We do not share the recent optimistic outlook of some competitors that summer 2019 airfares will rise,” it says.

“In the absence of further EU airline failures, and because of the recent fall in oil prices (which allows loss-making unhedged competitors to survive longer), we expect excess short haul capacity to continue through 2019.”

In its recent profit warning, Ryanair said that its fares in the second half of the financial year would fall by 7%, far more than the 2% it previously stated.

Still CEO
Despite the problems, Michael O’Leary has signed on for another new five years as chief executive. But the company’s chairman, David Bonderman, will leave in summer 2020 after 23 years in the job.

Almost 30% of shareholders last year voted against Bonderman’s re-election as chairman after a summer of cancellations and delays.

Structure-wise, the airline plans to move to a group like that of IAG over the next 12 months, with four airline subsidiaries – Ryanair DAC, Ryanair Sun, Ryanair UK and Laudamotion, led by their own CEOs and management.

O’Leary, who has been chief executive for 24 years, will oversee costs, aircraft purchases and buying rival airlines, the company says. But the new structure “puts more distance between him and the unions,” HSBC transport analyst Andrew Lobbenberg told the BBC.

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