Ryanair will be forced to cut or close “a number” of loss-making bases this winter leading to pilot and cabin crew job losses due to Boeing 737 Max delivery delays.
The Irish no-frills airline group did not provide details of the bases under threat or the level of jobs at risk.
“We continue to work with our people and their unions to finalise this process,” Ryanair Holdings said.
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The disclosure came as half year profits remained flat and the group warned of market uncertainty over a possible no deal Brexit and continuing hold ups in delivery of the new generation 737 Max aircraft.
Ryanair also narrowed its full year profit guidance to a new range of between €800 million to €900 million.
Reporting an unchanged net profit of €1.15 billion for the six months to September 30, the company said it did not expect its first 737 Max to be delivered until March or April, 2020 at the earliest.
The new generation aircraft has been grounded since March following two crashes in Indonesia and Ethiopia which killed a total of 346 people.
And Ryanair warned today: “The risk of further delay is rising. We expect to receive only 20 Max-200s – previously 58 – in time for summer 2020 which has cut our growth rate from 7% to 3% (162 million to 157 million guests in full year 2021).
“We remain confident that these ‘gamechanger’ aircraft, which have 4% more seats, but burn 16% less fuel, when delivered will transform our cost base and our business for the next decade.
“Due to these delivery delays, we will not see any of these expected cost savings delivered until full year 2021.”
Ryanair originally expected to receive its first 737 Max in the spring of this year.
However, Ryanair Holdings, which includes Austrian arm Lauda, saw passenger numbers rise by 11% to 85.7 million in the period to September with revenue also up 11% to €5.39 billion.
But profits were pegged at the same level as the equivalent half year in 2018 as its fuel bill soared by 22% or €289 million to €1.59 billion.
This was partially offset by improved punctuality and lower delay compensation costs.
Looking forward to the winter period, Ryanair said its outlook for the rest of the year “remains cautious”.
“We try to avoid the unreliable optimism of some competitors,” the group added.
“Full year traffic will grow 8% to 153 million but we expect a slightly better fare environment than last winter.
“This however remains sensitive to any market uncertainty such as a ‘no deal’ Brexit.
“We expect ancillary revenues will grow ahead of traffic growth, supporting full-year revenue per guest growth of 2% to 3%.
“The full year fuel bill will rise by €450 million and ex-fuel unit costs will increase by 2%.
“While Lauda’s losses will be higher than originally expected, due to overcapacity in Austria and Germany, traffic will be higher as we take advantage of the availability of low cost A320 leases.
“We are therefore narrowing our full year guidance to a new range of €800 million to €900 million profit after tax.
“This guidance is heavily dependent on close in second half [of financial year] fares, Brexit and the absence of any security events.
- Steve Miley, a senior market analyst at City firm Asktraders.com said: “To say that it’s been a tough first half for Ryanair would be an understatement. The budget airline has had to grapple with pilot strikes, Brexit uncertainty hitting consumer demand, currency headwinds and rising risk of further delay to its Boeing Max 737 aircrafts.
“Despite the challenge’s, revenue increased by 11% to €5.39 billion on the back of a 10% growth in passenger numbers and 18% jump in revenue from ancillaries. Ryanair narrowed its full year profit after tax guidance to €800-900 million.
“Investors were impressed by the figures with the share price jumping over 3% in early trade, as it continues to fly higher from August’s low.
“Investors are taking Boeing Max 737 problems in their stride. Deliveries of the Max 737 are expected to be lower than initially expected in March, with rising possibility of delay.
“Growth at the airline is expected to take a hit again next summer as the airline will carry around five million fewer customers than planned. This hasn’t dented demand for the shares this morning.”
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