Ryanair today (29 July) reported a 21 per cent fall in first quarter profits to €243 million as a decline in fares, higher fuel and staff costs pulled results down.
The low-cost carrier said there was a six per cent decline in average fare, although this was offset by strong ancillary revenues and 11 per cent traffic growth to 42 million.
Costs rose 19 per cent as fuel bill increased 24 per cent and Lauda costs were fully consolidated – but not in the prior year quarter.
Revenue for the quarter rose 11 per cent to €2.31 billion from €2.08 billion in the same quarter last year.
The airline flew 41.9 million passengers, 11 per cent more than the 37.6 million in the same quarter in 2018. The load factor remained the same at 96 per cent.
Ryanair chief executive officer, 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 delivery of the first of five Boeing 737 Max aircraft has been delayed from the first quarter to probably January at the earliest (subject to EASA approval) and it now expects to receive only 30 Max deliveries in time for summer 2020 (previously 58) which will cut Ryanair’s summer 2020 growth rate from seven per cent to three per cent (162 million to approximately 157 million guests in FY21).
“We have great confidence that these “gamechanger” aircraft (which have 4% more seats, but burn 16% less fuel and have 40% lower noise emissions) will transform our costs and our business. Due to these delivery delays, we will not now see these cost savings delivered until FY21,” O’Leary added.
In June, Malta Air became the 4th airline in the Ryanair Group. This start-up will grow its Maltese operation from six to 10 based aircraft over the next three years and it will also operate all of its French, German and Italian bases.
This summer, Lauda is operating 20 lower-cost A320s. These aircraft, it said coupled with other cost efficiencies and improving ancillary revenues will significantly lower Lauda losses in year two, despite lower fares due to excess capacity in the German and Austrian markets.
Buzz, in Poland, will operate seven charter and 17 scheduled aircraft this summer and continues to grow profitability in its second year of operations. “We expect high fuel prices and overcapacity in European short-haul to lead to further airline failures this winter creating more growth opportunities for Ryanair’s four airlines,” O’Leary said.
O’Leary said it FY20 profit will be in a range of €750 million to €950 million.
He added: “The current weak fare environment has continued into Q2 and we expect H1 fares to be down approx. six per cent. With almost zero H2 visibility, FY20 fare guidance is towards the lower end of our guided -2% to +1% range.
“However, the strong performance of ancillaries continues to support our RPP growth of +2% to +3% (previously +2% to +4%). We expect traffic to grow by 7% to over 152m, slightly less than the 153m previously guided due to the Boeing MAX delivery delays.
“Costs will increase as our fuel bill grows by €450m and, as previously guided, we expect ex-fuel unit costs will rise by just 2%. This guidance remains heavily dependent on close-in Q2 fares, H2 prices, the absence of security events, and no negative Brexit developments in H2.”