Ryanair today reported that its full-year profit for the financial year ending 31 March 2019 fell by 29 per cent of €1.02 billon excluding Lauda – off the back of strong traffic growth.
Passenger numbers were up seven per cent to 139.1 million but this was offset by a six per cent decline in fares with the average fare falling to €37. The load factor was up one percentage point to 96 per cent.
The Irish low-cost carrier said it achieved strong ancillary growth of 19 per cent but that was offset by higher fuel, staff and EU261 costs. Total revenue was up six per cent to €7.56 billion. The start-up of Lauda costs Ryanair €139.5 million.
Ryanair started 406 new routes and launched nine new bases in 2018. The airline’s year-end fleet grew to 455 Boeing 737 and 19 Airbus A320 aircraft.
Ryanair chief executive officer, Michael O’Leary said short-haul capacity growth and the absence of Easter in Q4 led to a six per cent fare decline, which stimulated seven per cent traffic growth to over 139 million (142 million guests including Lauda).
Ryanair rebranded its Polish AOC Ryanair Sun to Buzz and O’Leary said the management team successfully delivered a “modest profit” in their first year of operations. It will operate a fleet of 25 aircraft in the 2020 financial year.
In December 2018, Lauda (an Austrian AOC) became a wholly owned subsidiary of the Ryanair Group. O’Leary said it consolidated three million customers in its first year of operations to March 2019 but suffered exceptional start-up losses of €139.5 million, mainly due to the very late release of its summer 2018 schedules, very low promotional fares, expensive short-term aircraft leases and an unhedged fuel position.
Lauda will enter its second year with a larger (lower-cost) fleet of 23 A320 aircraft, and a target of just over six million passengers per annum. They have signed agreements to grow this fleet to 35 A320 aircraft for summer 2020 and by year year (FY21), O’Leary said it believes Lauda will grow to carry over eight million guests per annum and will be trading profitably.
Higher oil prices and lower fares have seen a wave of EU airline failures including Primera (UK & Spain), Small Planet, Azur and Germania (Germany), Sky Works (Switz.), VLM (Belgium), Cobalt (Cyprus), Cello & Flybmi (UK) and WOW (Iceland) fall by the wayside while Flybe (UK) was sold, while both Alitalia and Thomas Cook airline are currently for sale.
On the European airline industry, O’Leary said: “We expect further consolidation and airline failures in winter 2019 and again into 2020 due to over-capacity, weaker fares, and higher oil prices particularly among those airlines who are significantly unhedged, or unable to hedge.”
He added Ryanair has delayed the delivery of its first five Boeing 737 Max aircraft to winter 2019 (subject to regulatory approval by EASA) and the airline continues to “have utmost confidence in these aircraft”.
As for the future and 2020 financial year, O’Leary said the airline group remains cautious on pricing and forecasts traffic will grow by eight per cent to 153 million, revenue growth will be three per cent and it will post broadly flat group profits.
He said first half of the year bookings are slightly ahead of last year, fares are lower and expects this trend will continue through summer 2019 while costs will increase as the full-year fuel bill jumps by another €460 million.
O’Leary added: “This guidance is heavily dependent on close-in peak summer fares, H2 prices, the absence of security events, and no negative Brexit developments.”