Ryanair has profits lift-off but warns of turbulence

● Boss Michael O’leary warns on Brexit again ● High oil price also a looming headwind

Budget airline Ryanair unveiled a smooth ascent in annual profits yesterday, but gave warning that it faced the headwind of higher fuel costs in the next 12 months against the backdrop of the rising oil price.

Profits at the group rose 10 per cent rise to €1.45 billion (£1.26bn) in the year to 31 March on revenue up 8 per cent at €7.15bn.

Lower average air fares, which were down 3 per cent at €39.40, helped lift Ryanair’s passenger numbers 9 per cent to 130.3 million, while the key load factor came in at 95 per cent.

However, David Madden, a markets analyst with CMC Markets, said: “The figures were impressive, but the guidance was downbeat. The outlook was ‘on the pessimistic side of cautious’ as staffing and fuel costs are expected to rise.”

Michael O’leary, Ryanair’s chief executive, said the airline expects this year’s profit to fall to between €1.25bn and €1.35bn.

The solid figures in the latest year came despite what the company has branded as a “rostering management failure”, when it was forced to cancel flights after mismanaging pilots’ annual leave. The fiasco last autumn hit some 700,000 passengers, and came alongside pilot strike action.

O’leary said he was pleased with the latest profit rise and an unchanged net profit margin of 20 per cent despite the cut in air fares. He added that the performance was achieved “during a year of overcapacity in Europe, leading to a weaker fare environment, rising fuel prices, and the recovery from our September 2017 rostering management failure”.

But cautioning on the current year, the chief executive cited the effect of higher oil prices on the airline’s costbase and the potential fallout from Brexit.

O’leary said that Ryanair expected unit costs over the current financial year to lift 9 per cent as the oil price now sits at about $80 a barrel.

It will add more than €400 million to the group’s costbase, while staff costs are expected to rise by almost €200m.

On the UK’S departure from the EU, the Irish carrier added that it continued to plan for a hard Brexit in March 2019.

Ryanair said that in that situation, UK shareholders will be treated as non-eu and this could “potentially affect” the company’s licensing and flight rights. It is anticipating that contingency via a plan to “restrict the voting rights of all non-eu shareholders in the event of a hard Brexit” in order to ensure it is majorityowned and controlled by EU shareholders at all times.

Accendo analyst Artjom Hatsaturjants said: “After a strong 2018, the worse outlook is being pinned on rising staff costs, now that [Ryanair] is recognising unions, and falling air fares amid fierce price competition, both likely to eat into 2019 profits.”