Ryanair predicts collapse of more European airlines this year

Despite the Irish carrier reporting its lowest annual profits for four years, it insists that it will be one of the winners as airlines compete fiercely for passengers. Tony McDonough reports

Ryanair, aircraft
Ryanair has seen its profits fall in a tough market for airlines

 

More European airlines will go bust this year amid higher fuel costs and cut-throat price wars, low-cost carrier Ryanair is warning.

However, despite the Irish company reporting its lowest annual profits for four years, it insists that it will be one of the winners as airlines compete for passengers and revenues in what he became a fiendishly tough market.

Ryanair, which operates more than 30 routes out of Liverpool John Lennon Airport, posted a profit after tax of just over €1bn for the 12 months to March 3, down from €1.45bn the previous years. Revenues rose to €7.56bn from €7.15bn.

Aviation failures

There have been a number of high-profile aviation failures in recents times, including Primera, Small Planet, Azur and Germania, Sky Works, VLM, Cobalt, Cello & Flybmi (UK) and WOW.

UK carrier Flybe, which also operates out of Liverpool, was sold, while both Alitalia and Thomas Cook’s airline are currently for sale. And Ryanair itself closed unprofitable bases in Bremen & Eindhoven and we cut aircraft numbers in Niederrhein, Hahn and the Canary Islands.

In its annual report, the company 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.”

Wage bill

Ryanair’s own profits were hit by higher fuel costs and industrial unrest among cabin crew and pilots. It’s wage bill soared by €200m, including a 20% increase for pilots, and compensation payouts caused by air traffic control strikes and cost shortages led to a €50m bill.

Although passenger numbers were up 7% to 139m average fares fell 6% to €37 per passengers, despite a strong rise of 19% in ancillary sales to €2.4bn.

Ryanair says it remains committed to the purchase of the Boeing 737 MAX despite two crashes of the aircraft in recent months. Lion Air flight crashed into the Java Sea shortly after take-off in October, killing all 189 people on board, and in March this year, Ethiopian Airlines flight 302 carrying 157 people also crashed with no survivors.

Investigations into the safety of the aircraft’s systems are continuing and Ryanair has subsequently delayed delivery of five of the planes. It says once they are in services they will deliver significant costs savings over the next five years.

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