Ryanair is poised to announce the grounding of up to 20 aircraft this winter in anticipation of falling demand, say analysts, despite reporting record passenger numbers in May.
The low-cost giant will report substantial profits for the year to March on Tuesday, but chief executive Michael O’Leary has warned that Ryanair profits will tumble while the oil price stays around $135 a barrel.
Ryanair carried more than five million passengers last month, up 22% on a year earlier. However, analysts predict the carrier will ground aircraft during off-peak periods this winter after grounding several aircraft at Stansted in the winter just gone.
O’Leary has been in the forefront of predicting a serious downturn in the industry. But unlike his rivals, the Ryanair boss has gambled on oil prices coming down in the near future and not bought future supplies in advance at lower prices – a practice known as hedging. British Airways is currently flying on jet fuel from oil bought at £85 a barrel, for example.
Ryanair has substantial amounts of cash to carry it through a recession and O’Leary expects to benefit from rival carriers going out of business. The Irish carrier boomed through the last airline downturn after 2001, buying up aircraft as other airlines cancelled orders.