Ryanair shares nosedive as it slashes half-year profit forecasts by 12%

Irish carrier operates more than 30 routes out of Liverpool John Lennon Airport and says continuing industrial action and rising fuel costs mean profits will be lower than expected. Tony McDonough reports

Ryanair
Ryanair operates more than 30 routes out of Liverpool John Lennon Airport

 

One of Liverpool John Lennon Airport’s biggest airlines Ryanair has slashed its half-year profit forecast by 12% as it continues to grapple with industrial strife.

The Dublin-based carrier, which operates more than 30 routes out of Liverpool to destinations across Europe, says it expects profits to be in the 1.1bn euros to 1.2bn euros range, down from previous forecast of 1.25bn euros to 1.35bn euros.

And, with continuing industrial action and higher fuel costs Ryanair chief executive Michael O’Leary warned the figures may have to be revised down again in the coming weeks. The company’s shares plunged 8% on the announcement.

Its fortunes contrast sharply with rival easyJet which said at the end of last week it expects its full-year profits to soar by 40%.

Pilot strikes

Ryanair had to deal with five pilots strikes during the summer leading to flight cancellations and in September there were two days of coordinated pilot/cabin crew strikes in Germany, Holland, Belgium, Spain and Portugal.

It also said it had not hedged its fuel bill against prices rises and would consequently be paying 10% more for its fuel thanks to the recent rise in the global price.

Falling confidence

Mr O’Leary said: “While we successfully managed five strikes by 25% of our Irish pilots this summer, two recent coordinated strikes by cabin crew and pilots across five EU countries has affected passenger numbers.

“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 five countries where unnecessary strikes have been repeated.

Capacity cuts

“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.”

Those cuts will include the closure of bases at Eindhoven and Bremen although most of the routes will continue with aircraft from other countries. Its five aircraft at its Niederrhein base will be cut to three with most routes continuing.

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