Ryanair boss orders costs review

RYANAIR chief Michael O’Leary has ordered a detailed review of the airline's cost base in the wake of its first drop in profits for 15 years.

The carrier has warned staff pay will be frozen next year, the delivery of its 125 Boeing 737-800s renegotiated and the Stansted Buzz operation wound down unless it can reduce aircraft lease costs with the lessor.

The controversial chief executive wants its cost base reduced by between 8% and 10% next year – around €200 – despite it already having the smallest cost base in the industry.

The move comes after O’Leary warned full-year profits to the end of March would be 10% lower than last year to €215 million. The carrier had previously estimated profits would be 10% higher than last year’s figures.

O’Leary blamed the fall on intense price competition from rivals.

"We have seen massive growth in capacity in the European market which is driving down prices and yields as many of the loss-making airlines try to compete and survive.”

He also warned load factors are suffering. January’s results are expected to reveal a load factor six percentage points below the 2003 figure at 70%.

He said future growth was set to be reigned in at around 20% per year, with next year’s target already met through the launch of new bases in Rome and Barcelona.