Ryanair shares fall 13% after lowering of profit projection
MORE than €1.8bn (£1.6bn) was knocked off Ryanair’s stock market valuation at one stage yesterday as it slashed its profit outlook.
Chief executive Michael O’leary blamed higher oil prices and the impact of strike action, and cautioned that further profit warnings could be issued if more flight disruption occurs between now and the end of the year.
Ryanair said it now expects to make a profit of between €1.1bn and €1.2bn in its current financial year that ends next March.
That’s 12% less than the €1.25bn to €1.35bn it had previously expected to make.
Shares in the airline tumbled more than 13% at one point, slashing its market capitalisation to just over €13bn (£11.5bn).
The airline boss also said that Ryanair will close a base in the German city of Bremen and also in the Dutch city of Eindhoven. It will also scale back a base in the German city of Weeze in the Niederrhein region as it cuts winter capacity.
It said it will enter consultations with pilots and cabin crew at the bases to minimise job losses.
“We expect to offer our pilots vacancies at other Ryanair bases, but as we have a large surplus of winter cabin crew, we will explore unpaid leave and other options to minimise cabin crew job losses,” said Mr O’leary.
He insisted that while Ryanair had comfortably managed strikes, the actions had put people off booking flights and also forced the carrier to sell tickets more cheaply in an effort to fill its expanding fleet.
“Customer confidence, forward bookings and third-quarter fares have been affected, most notably over the October school midterms and Christmas in those five countries where unnecessary strikes have been repeated,” he said.
Last week the airline was hit by strikes by some of its cabin crew in Belgium, the Netherlands, Spain, Italy and Portugal, as well as some pilots in Germany.
That saw it cancel 250 flights last Friday.
It has also been hit by other industrial action, including in July when some 100 of its pilots in Ireland staged a stoppage.
The actions stem from Ryanair’s continuing attempts to ink collective labour agreements with trade unions across Europe. Ryanair announced in December that it would recognise trade unions, a decision Mr O’leary said was his.
Driven: Michael O’leary