RYANAIR PROFIT PLUNGES TO €1.02B
Earnings may fall further due to fare wars, says chief
RYANAIR reported its weakest annual profit in four years yesterday and said earnings could fall further next year as Europe suffers what chief executive Michael O’Leary described as “attritional fare wars”.
But he said he expected Europe’s shorthaul sector to consolidate and fares to rise within five years.
Europe’s largest low-cost carrier, which had already flagged a sharp fall in profits in two warnings last year, saw after-tax profit fall to €1.02 billion (RM4.76 billion) for its financial year to March 31, from €1.45 billion in the previous year.
Profit for the year to March 2020, which for the first time will include its acquired loss-making Laudamotion unit, will be between €750 million and €950 million.
A company poll of over 10 analysts published ahead of the release had forecast an after-tax profit of €1.03 billion for the year to March 2019 and €977 million for the year to March 2020.
The profit forecast is “disappointing” compared to market expectations, said Liberum analyst Gerald Khoo in a note, pointing to continued increases in nonfuel costs, forecast by Ryanair to hit two per cent in the coming year, as “the main disappointment”.
Traders said they expected shares in Ryanair to fall between three and five per cent in early deals.
Several rival airlines have warned of a worse trading environment — partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.
Ryanair said it expected summer fares to be lower than last year although they could improve in the winter to leave fares for the full year to March 2020 between two per cent lower and one per cent higher than last year.
In what O’Leary described as a vote of confidence from the board, Ryanair will begin a €700 million share buyback in the coming days.