Ryanair has posted a €19.6m loss for the final quarter of the 2018 calendar year (the third quarter of Q3 its fiscal year), the first time it has failed to make a quarterly profit since 2014. The budget carrier cites "excess winter capacity in Europe" as the primary reason for the declining performance.
Ryanair carried 32.7m passengers in the quarter, up 8% from 30.4m during the same period of the previous year and revenue, at €1.53bn, was up 7%. Ancillary revenue increased by 26%. The increases were offset by a 6% decline in average fares to less than €30 , and the firm's fuel bill rising by 32% combined with staff cost increases of 31% led to overall operating costs rising by 20%.
The airline also said the risk of a no-deal Brexit “remains worryingly high.” The statement continued: “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."
Ryanair is maintaining full year guidance at between €1.0 and €1.2bn, down by €100m on a profits warning issued in January. It says fares are expected to fall 7% during the second half of the trading year compared to an original forecast of a decline of 2%. It also claims ancillary sales will grow as its customers choose lower cost optional services and expects a slight improvement in performance for the remainder of the financial year due to a decline in fuel prices.
While revealing the latest trading results, Ryanair also announced that its controversial CEO Michael O'Leary will move to become group CEO and will oversee the Ryanair, Ryanair UK, Ryanair Sun and Laudamotion units.
Editorial opinion: The claim that "excess winter capacity in Europe" is to blame for Ryanair's disappointing performance is a little confusing. The figures point to rising passenger numbers and increasing revenue from tickets and ancillaries. No doubt fares have had to be reduced to keep its aircraft full in a competitive market, but it seems that the major changes are the rising cost of fuel and staff - the latter notable since Ryanair has increasingly had to deal with a unionised workforce. Operations have also been impacted by several strikes that will have impacted its financial position. Is the latest report another case of Ryanair blaming everyone but itself for a decline in performance?
The Aviation wrote about the challenges facing low cost airlines on February 1: Low costs under pressure? In that feature, over capacity was mentioned as a problem for this winter and beyond. While Ryanair remains extremely strong, other low-fare airlines including WOW Air, Germania and Flybe are currently seeking buyers or increased funding.
Text © The Aviation Oracle