Ryanair profits fell by 21% to €243 million in the last quarter as it blamed lower fares combined with higher fuel and staff costs.
Europe’s largest budget carrier identified the UK as one of the two weakest markets in the three months to June “where Brexit concerns weigh negatively on consumer confidence and spending”.
The airline also revealed that it expects deliveries of the Boeing 737 Max to be further delayed until at least the end of the year. The Max is currently grounded after two crashes which killed 346 people.
CEO Michael O’Leary said: “The delivery of our first five B737 Max aircraft has been delayed from Q1 to probably January at the earliest, subject to European Union Aviation Safety Agency approval.
“We now expect to receive only 30 Max deliveries in time for summer 2020, previously 58, which will cut Ryanair’s growth rate from 7% to 3%.”
However, he added: “We have great confidence that these ‘gamechanger’ aircraft, which have 4% more seats, but burn 16% less fuel and have 40% lower noise emissions, will transform our costs and our business.
“Due to these delivery delays, we will not now see these cost savings delivered until full year 2021.”
Ryanair also faced weakness in Germany “where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices,” O’Leary claimed.
“We expect high fuel prices and overcapacity in European short-haul to lead to further airline failures this winter creating more growth opportunities for Ryanair’s four airlines,” he added.
Ryanair reported a 6% year-on-year drop in average fares to €36, which stimulated an 11% rise in carryings to 42 million passengers in the three months.
The Irish group’s full year profit guidance continues to be “broadly flat”in a range of €750 million to €950 million.
“The current weak fare environment has continued into Q2 and we expect H1 fares to be down approximately 6%,” O’Leary said.
“We expect traffic to grow by 7% to over 152 million, slightly less than the 153 million previously guided due to the Boeing Max delivery delays.
“Costs will increase as our fuel bill grows by €450 million and, as previously guided, we expect ex-fuel unit costs will rise by just 2%.
“This guidance remains heavily dependent on close-in Q2 fares, prices [in the second quarter of the financial year], the absence of security events and no negative Brexit developments in H2 [the second half of the financial year].”
Flight cancellations in June were cut to 20 due to air traffic control staff shortages against more than 1,100 in the same month last year.
But O’Leary said: “Regrettably, ATC staffing delays continue to damage the punctuality of all EU airlines, particularly at weekends.
“We are working hard to ensure our guests enjoy on-time flights and we continue to campaign with our partners in A4E [Airlines For Europe] to encourage the European Commission to take action to minimise the impact of ATC staff shortages and strikes on overflights.”
Ancillaries, driven by strong priority boarding and preferred seats sales, grew 27% in the quarter to €0.8 billion as overall revenues rose 11% to €2.3 billion.
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