Ryanair shares dip amid falling profits

Aviation: High oil prices and pilot costs blamed for 20% slump

Ryanair shares fell sharply yesterday as profits plunged 20%, after the budget airline was stung by lower fares, higher oil prices and pilot costs.

The company said pre-tax profits for the three months to June 30 slumped to £285 million, from £354m a year earlier.

It also kept full-year profit forecasts unchanged at £1.12 billion to £1.21bn, but warned this was “heavily dependent” on fares in the current quarter and would require “no negative Brexit developments”.

Average fares are expected to be lower over the summer due to the Fifa World Cup, the heatwave across northern Europe and uncertainty about pilot strikes, Ryanair said.

Like other airlines, Ryanair is being hit by air traffic control strikes in Europe, with carriers forced to pay some care costs to customers affected by the disruption.

Last year Ryanair was also forced to cancel hundreds of flights due to what it said were problems with pilots’ rotas.

Unions claimed the real issue then was that disenchanted pilots were deserting the airline in droves. But Ryanair denied this, insisting the cancellations were the results of a “rostering failure”.

The issue came to a head in December, when chief executive Michael O’Leary recognised unions for the first time.

The airline has also been hit by pilot strikes in Ireland recently.

Ryanair’s shares were down around 4.6% in morning trading.

Mr O’Leary said: “Traffic grew 7% to 37.6m, despite over 2,500 flight cancellations caused by air traffic control staff shortages and strikes.”

The company said fuel prices had “risen substantially” from $50 per barrel a year ago to nearly $80 in the first quarter.

Staff costs increased by 34% due to a 20% rise in pilot pay, 9% more flight hours and a 3% general pay increase for non-flight staff.

Dublin-based Ryanair said it was concerned about the danger of a hard Brexit and warned the risk of it happening was being “underestimated”.

It added: “While there is a view that a 21-month transition agreement from March 2019 to December 2020 will be implemented (and extended), recent events in the UK political sphere have added to this uncertainty, and we believe that the risk of a hard Brexit is being underestimated.

“It is likely that in the event of a hard Brexit our UK shareholders will be treated as non-EU.”

“Recent events in the UK political sphere have added to this uncertainty”

GOING DOWN: Ryanair said the buoyant oil price has impacted its costs and that the fall in profits comes despite additional flights