Ryanair profit hits 4-year low - GulfToday

Ryanair profit hits four-year low

Ryanair

A Ryanair aircraft in Frankfurt, Germany. Agence France-Presse

Ryanair reported its weakest annual profit in four years and said earnings could fall further as Europe suffers what Chief Executive Michael O’Leary described as “attritional fare wars.”

Shares in the airline, Europe’s largest low-cost carrier, fell 6 per cent on Monday after its profit forecast for the year to next March fell short of analyst expectations.

Ryanair, which had already signalled a sharp fall in profitability in two warnings last year, saw after-tax profits fall to 1.02 billion euros ($1.14 billion) for its financial year to March 31 from 1.45 billion euros the previous year.

Profit for the year to March 2020, which will include its recently acquired and loss-making Laudamotion unit for the first time, will be between 750 million and 950 million euros compared to an equivalent figure of 880 million for the previous year.

A company poll of over 10 analysts published ahead of the release had forecast an after-tax profit 977 million euros for the year to March 2020.

Liberum analyst Gerald Khoo described the profit forecast and guidance of non-fuel costs rising 2 per cent as “disappointing.” Davy Stockbrokers said it would cut its forecast by 9 per cent but believed the “nadir point” had likely been reached.

Several rival airlines have warned of a worse trading environment - partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.

While O’Leary said weakness in fares may ease in the winter, he warned investors that the European airline sector was experiencing a cyclical fall in profitability.

“Frankly, if we are in a period where there are going to be attritional fare wars... profits will suffer for a year or two and I think that is what shareholders should expect,” O’Leary said in a video presentation.

Reuters