Ryanair, unions, talks, Ireland, pilots
Ryanair

Ryanair profits down 20 percent

Europe’s largest low-cost carrier first quarter (April-June) financial results were below expectations.

Higher expenses impact the result

Ryanair known for its rigid cost control, making it the most profitable low-cost carrier in Europe, now feels the pain of rising costs.
Last year Ryanair run into a scheduling problem, resulting in thousands of flights being cancelled. To avoid such mishaps in the future and secure sufficient number of pilots to operate its growing route network, pilot wages were increased with 20 percent together with a €10.000 sign-on fee for new pilots.
The impact of the increased pilot wages and benefit are now visible in the balance sheet and resulted in personnel expenses increased 34 percent in the first quarter.

Air traffic controller (ATC) strikes and capacity limitations hit hard

During April-June more than 2500 Ryanair flights were cancelled due to ATC actions and limitation to operate in the airspace over several EU countries. The main problem was made by ATC in Marseilles, in Southern-France but ATC problems in the UK, Germany, Italy and Greece also had an impact. Ryanair state that 450.000 passenger were affected and were unable to fly to their destinations.
The high number of flight cancellations resulted in 40 percent increase of EU261 compensation cases to be handled and paid out by Ryanair.

Airfares under pressure and costs are increasing

The average ticket fare was down 3 percent to 39 euros, due to more competition and capacity between the low-cost carriers in Europe, together with the long time hot and sunny weather in most parts of Europe, reducing travel volumes.
Ryanair expect airfares to pick-up 1 percent during Q2 (July-September) but for the H2 period (October-March) airfares are expected to remain flat, meaning no increase.

Ryanair is 90 percent fuel hedged

The high oil price has been costly for airlines not securing themselves by hedging most of their estimated fuel requirement. Ryanair is aggressive in fuel hedging and have secured 90 percent of its fuel requirements in 2018 and 2019, resulting in the ability to project its total costs in the short and medium term. Consequently, if the fuel price remains high or continue to increase, Ryanair will benefit from it.

Strikes by pilots and cabin crew

Ryanair is in a process of negotiating local agreements for its pilots and crew all over Europe. In some countries as Ireland, Spain and Portugal negotiations go slow and have already resulted in strikes and more are planned. These strikes will have an impact on Ryanair revenues and brand if they continue over time.

Ryanair Q1 result at a glance

Total revenues €2.71 billion +9 percent versus last year (LY). Profit after tax €319 million -20 percent vs LY. Average fare per passenger €39 -3 percent vs LY. Cost per passenger €45 +10 percent vs LY. Earning per share €26.6 -18 percent vs LY. Ancillary revenues +25 percent. Ryanair received 14 new Boeing 737-800s and had by end June a fleet of total 440 Boeing 737-800.