PROFITS NOSEDIVE: Ryanair blames ‘excess capacity’ and higher costs and forecasts more airline failures

BUDGET Irish airline Ryanair has today (Monday) announced a third-quarter net loss of €20m despite traffic growth of eight per cent and a strong growth in priority boarding and reserved seating revenues.

The low-cost carrier blamed rising fuel prices, higher staff costs, including the 20 per cent pilot pay increases, investment in engineering staff, pilot and cabin crew training and elevated EU261 compensation costs due to the high number of air traffic control staff shortages and disruptions.

The airline is also forecasting that rival airlines could fail in 2019 due to overcapacity in the European market.

Ryanair’s Michael O’Leary said: “While a €20m loss in Q3 was disappointing, we take comfort that this was entirely due to weaker than expected air fares so our customers are enjoying record low prices, which is good for current and future traffic growth. While ancillary revenues performed strongly, up 26% in Q3, this was offset by higher fuel, staff and EU261 costs.”

The airline said: “Higher oil prices and lower fares have over the past four months seen a wave of EU airline failures including Primera (UK and Spain), Small Planet and Azur (Germany), Sky Works (Switzerland), VLM (Belgium), Cobalt (Cyprus) and Cello (UK). In addition, other bigger airlines like Wow (Iceland), Flybe (UK), and Germania (Germany) are urgently seeking buyers or, like Norwegian, refinancing just to survive.

Ryanair added in statement: “We expect more closures and airline failures in 2019 due to overcapacity in the European market, which is causing continued fare weakness.”

The budget airline confirmed they will take delivery of their first five B737 MAX “gamechanger” aircraft from April. These new aircraft have 4 per cent more seats, are 16 per cent more fuel efficient and have 40 per cent lower noise emissions.

Ryanair has also said the risk of a “no deal” Brexit remains worryingly high adding: “While we hope that common sense will prevail, and lead to either a delay in Brexit, or agreement on the 21-month transition deal currently on the table, we have taken all necessary steps to protect Ryanair’s business in a no-deal environment.

“We have now obtained a UK AOC to protect our three domestic UK routes, and we will place restrictions on the voting rights and share sales of non-EU shareholders for a period of time (in the event of a hard Brexit) to ensure that Ryanair remains at all times an EU-owned and EU-controlled airline, even if the UK exits the EU without a deal.”