Brexit and 737 Max delays hit Ryanair profits

Ryanair profits fell by over one-fifth in the first quarter of the airline’s financial year, from April to June 2019. The carrier says it has “almost zero” visibility on how the main summer season from July to September will turn out. 

Europe’s biggest budget airline said: “Brexit concerns weigh negatively on consumer confidence and spending.”

Profits were down 21 per cent to €243m (£219m) on revenue of €2.3bn (£2.07bn). It represents an average €5.80 (£5.20) profit for each of the 41.9 million passengers flown – 11 per cent more than in 2018.

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Fares fell by an average of 6 per cent compared with 2018, but the dip was offset by stronger “ancillary revenues” – everything from pre-booked seating to scratch cards.

Costs rose by 19 per cent due to more expensive fuel (up 24 per cent) and staff.

Ryanair’s load factor (the proportion of seats filled) stayed at 96 per cent, ahead of the industry worldwide and representing only seven or eight empty seats on the average flight.

Its Irish rival, Aer Lingus, has a load factor of around 80 per cent.

The Ryanair chief executive, Michael O’Leary, said: “The two weakest markets were Germany, where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices, and the UK where Brexit concerns weigh negatively on consumer confidence and spending.”

He said there was “almost zero” visibility on how the summer season will turn out. 

Mr O’Leary also warned: “ATC [air-traffic control] staffing delays continue to damage the punctuality of all EU airlines, particularly at weekends.”

Ryanair was due to start flying the Boeing 737 Max aircraft in May 2019. But the new plane has been grounded worldwide following two fatal crashes, blamed on a flawed anti-stall system, which killed 346 people.

The airline now says it will probably receive the first five of a total of 210 Max aircraft in “January at the earliest”, and will have only 30 in service by the start of the summer 2020 season – barely half the intended number.

But Mr O’Leary expressed “great confidence” in these “gamechanger” aircraft, which will sharply reduce costs per seat. Ryanair has ordered a special high-density version.

“Due to these delivery delays, we will not now see these cost savings delivered until financial year 2021,” he said.

The Ryanair boss also predicted that more rivals will collapse in the coming winter, saying: “We expect high fuel prices and overcapacity in European short-haul to lead to further airline failures this winter creating more growth opportunities.”

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