Ryanair today (1 October) lowered its full year profit guidance (excluding Laudamotion) from a current range of €1.25bn – €1.35bn, to a new range of €1.10 billon to €1.20 billion.
This the low-cost carrier said was due to lower traffic and weaker close in fares in September, caused by two days of coordindated pilot/cabin crew strikes in Germany, Holland, Belgium, Spain and Portugal;
Lower Q3 fares as forward bookings (particularly for the Oct school mid-terms and Christmas) and customer confidence affected by fear of further strikes.
Higher EU261 care and re-accommodation costs arising from these recent strikes; and higher prices ($82bbl) for unhedged oil (10 per cent).
Ryanair noted that Q2 & Q3 traffic and fares will be somewhat lower than expected largely as a result of these two recent five country strikes, which it said was incited by competitor employees.
However, the carrier said despite the fact it has agreed to meet union demands for local contracts, local law, and a five week arbitration with pilots in Germany when the VC Union sought a prolonged five month arbitration.
Ryanair chief executive officer, Michael O’Leary said: “While we successfully managed 5 strikes by 25% of our Irish pilots this summer, 2 recent coordinated strikes by cabin crew and pilots across 5 EU countries has affected passenger numbers (through flight cancellations), close in bookings and yields (as we re-accommodate disrupted passengers), and forward air fares into Q3.
“While we regret these disruptions, we have on both strike days operated over 90% of our schedule. However, customer confidence, forward bookings and Q3 fares has been affected, most notably over the Oct school mid-terms and Christmas, in those 5 countries where unnecessary strikes have been repeated.
“These strikes have also added to our EU261 costs while, at the same time, our unhedged fuel costs have jumped as oil prices rise to $82pbl which affects 10% of volumes, and all of Laudamotion’s fuel bill.
“Like a number of other EU airlines, we have decided to trim our winter 2018 capacity (by 1%) in response to this lower fare, higher oil and higher EU261 cost environment. We are today implementing the following modest winter cuts (all from Mon. 5 Nov.)”
O’Leary said Ryanair’s four aircraft Eindhoven base will close, but most routes to/from Eindhoven will continue on overseas based aircraft.
And the carrier’s two aircraft Bremen base will close with most routes continuing on non-German aircraft and its five aircraft Niederrhein base will be cut to three aircraft with most routes continuing on the remaining three aircraft.
He said: “All affected customers have been contacted by email/SMS this morning and will be re-accommodated on other flights or refunded as they so wish. We will also now consult with our pilots and cabin crew at these 3 bases to minimise job losses.
“We expect to offer our pilots vacancies at other Ryanair bases but, as we have a large surplus of winter cabin crew, we will explore unpaid leave and other options to minimise cabin crew job losses.”
O’Leary also said Ryanair expects to carry 138 million passengers in the 2019 financial year due to the challenges, a million down on previous targets,
He added: “Ryanair cannot rule out further disruptions in Q3, which may require full year guidance to be lowered further and may necessitate further trimming of loss making winter capacity.
“Shareholders should note that the above guidance excludes start up (exceptional) losses in Laudamotion of approx. €150m (which will be consolidated into the Ryanair Group FY19, H1 and FY financial results).”