Ryanair turns on Boeing as quarterly profits dip by a quarter

  • Profits for April-June down by 24pc
  • Profit warning for crucial summer period
  • Share price has halved in twelve months
  • Warns there may be no Boeing 737MAX until next summer
  • O’Leary wants Boeing to ‘get its shit ttogether’

Ryanair’s first-quarter profits slumped by 24pc, thanks to fare wars in Germany and Boeing 737MAX delays. Ryanair has 135 of the 737 Max models on order, with 58 due for delivery by summer 2020, but the airline will not accept them until regulators have declared the plane safe to fly.

Average fares at Europe’s largest low-cost carrier were likely to fall by 6pc over the crucial summer period. Already, declines in fares pushed pretax profit down to €262m for the three months to 30 June, compared with €345m in the same period of 2018.

Ryanair stuck to its annual profit target of between €750m and €950m due to increased spend on acilliaries, which include food, perfume and scratchcards. Shares in the airline fell by 0.7pc by the end of the day, having almost halved in value in two years.

Ryanair halved growth targets for next year and scrapped 30,000 planned flights. It warned it could close bases at airports. Michael O’Leary has said he cannot rule out making some of Ryanair’s 17,500 staff redundant and may not have any of the aircraft ready by next summer unless Boeing “gets their shit together” in making upgrades required by regulators.

“We would not rule out redundancies and job losses, which will be inevitable if these Max delays are as presently envisaged or get worse”.

The Ryanair press statement:

  • Ryanair Q1 profits fall 21pc to €243m due to lower fares,
  • Higher fuel & staff costs. full year guidance unchanged.

Ryanair Holdings plc today (29 July) reported a 21pc fall in Q1 profits to €243m. A 6pc decline in ave. fare was offset by strong ancillary revenues and 11pc traffic growth to 42m guests. Costs rose 19pc as our fuel bill increased 24pc and Lauda costs were fully consolidated (but not in the prior year quarter).

Q1 (IFRS) Jun. 2018 Jun. 2019 pc Change
Guests 37.6m 41.9m +11pc
Load Factor 96pc 96pc        –
Revenue €2.08bn €2.31bn +11pc
PAT €309m €243m -21pc
Basic EPS (euro cent) 26.62 21.47 -19pc


Ryanair’s Michael O’Leary said:

“As previously guided, Q1 profits fell 21pc to €243m due to lower fares, higher fuel and staff costs.

Q1 highlights include:


  • Revenue per guest flat at €55 (6pc lower fares offset by 14pc higher ancillary rev.)
  • Traffic up 11pc to 42m guests
  • 239 new routes & 4 new bases (Bordeaux, Marseille, Southend & Berlin) launched
  • Malta Air becomes the fourth  Group airline
  • Lauda Airbus fleet grows to 20 A320s
  • MAX deliveries are further delayed to end of year
  • Ryanair becomes first EU airline to publish monthly CO₂ emissions (66g per pax/km)
  • €700m share buyback commenced in May

Revenue Revenues rose 11pc to €2.3bn. A 6pc decline in average fare to €36 stimulated 11pc traffic growth to 42m guests. The two weakest markets were Germany, where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices, and Britain where Brexit concerns weigh negatively on consumer confidence and spending. Ancillaries, driven by strong priority boarding and preferred seats sales, grew 27pc to €0.8bn. As a result, revenue per passenger (“RPP”) was broadly flat at €55. Ryanair Labs continues to develop services to improve customer experience and later this year will roll-out a new digital platform with improved, personalised, guest offers.

Cost Leadership Ryanair has the lowest unit costs of any EU airline. As expected, our Q1 fuel bill increased 24pc (up €150m) due to higher prices & volume growth. Unit costs ex. fuel rose by 4pc, mainly due to the consolidation of Lauda (not in the prior year Q1 comp.), the hand back of expensive leases to Lufthansa, replacing them with 20 lower cost A320 operating leases, and a 21pc increase in staff costs.  We continue to negotiate attractive growth deals as airports compete to attract Ryanair’s reliable traffic growth. Our FY20 fuel bill is 90pc hedged at $709 per tonne and 37pc hedged for FY21 at $632.

On-Time Performance  Our investment in operational efficiency, including more spares, additional engineers and new improved handling contracts in Stansted, Spain & Poland has seen our OTP improve more than 7pc points in Q1 to over 90pc (excl. ATC). In June 2018 we cancelled over 1,100 flights due to ATC strikes but this was reduced to just 20 cancellations in June 2019, all of which were due to ATC staff shortage delays. Regrettably, ATC staffing delays continue to damage the punctuality of all EU airlines, particularly at weekends. We are working hard to ensure our guests enjoy on-time flights and we continue to campaign with our partners in A4E to encourage the European Commission to take action to minimise the impact of ATC staff shortages and strikes on overflights.

Boeing 737 MAX The delivery of our first 5 B737-MAX aircraft has been delayed from Q1 to probably January at the earliest (subject to EASA approval). We now expect to receive only 30 MAX deliveries in time for S.20 (previously 58) which will cut Ryanair’s S.20 growth rate from 7pc to 3pc (162m to approx. 157m guests in FY21). We have great confidence that these “gamechanger” aircraft (which have 4pc more seats, but burn 16pc less fuel and have 40pc lower noise emissions) will transform our costs and our business. Due to these delivery delays, we will not now see these cost savings delivered until FY21.

Balance Sheet Our balance sheet is one of the strongest in the industry with over 60pc of our fleet debt free. In May the Board approved a €700m share buyback programme and in Q1 we returned almost €100m to shareholders. Following the adoption of the new lease accounting standard (IFRS16) future operating lease obligations are now included on our balance sheet for the first time (adding over €220m to debt at June 30). Despite the share buyback and the impact of IFRS16, net debt was broadly flat at quarter end at €419m.

Group Airlines In June, Malta Air became the 4th airline in the Ryanair Group.  This start-up will grow our Maltese operation from 6 to 10 based aircraft over the next 3 years. It will also operate all our French, German and Italian bases. This summer, Lauda is operating 20 lower cost A320s. These aircraft, coupled with other cost efficiencies and improving ancillary revenues will significantly lower Lauda losses in Year 2, despite lower fares due to excess capacity in the German and Austrian markets. Buzz, in Poland, will operate 7 charter and 17 scheduled aircraft this summer and continues to grow profitability in its second year of operations. We expect high fuel prices and overcapacity in European short-haul to lead to further airline failures this winter creating more growth opportunities for Ryanair’s 4 airlines.

EU’s Cleanest, Greenest Airline In June Ryanair became the first EU airline to report monthly CO₂ emissions. With the highest load factor, and one of the youngest fleets, Ryanair delivers the lowest CO₂ per passenger/km of any major EU airline. Our CO₂ emissions have been cut by 20pc over the last decade and we are committed to reducing this by a further 10pc to under 60 grams per passenger/km by 2030. In May we launched our environmental partnerships, where we invest in carbon offset projects in Africa, Portugal and Ireland. Ryanair paid over €540m in environmental taxes in FY19 and expects to pay over €630m in FY20 (up 17pc).

Board Succession Following Stan McCarthy’s appointment as Deputy Chairman in April 2019, the Board has nominated Louise Phelan to take over as Senior Independent Director in Summer 2020 following the then retirement of current SID Kyran McLaughlin from the Board.

FY20 Guidance We continue to guide broadly flat FY20 PAT in a range of €750m to €950m.  The current weak fare environment has continued into Q2 and we expect H1 fares to be down approx. 6pc.  With almost zero H2 visibility, FY20 fare guidance is towards the lower end of our guided -2pc to +1pc range.  However, the strong performance of ancillaries continues to support our RPP growth of +2pc to +3pc (previously +2pc to +4pc).  We expect traffic to grow by 7pc to over 152m, slightly less than the 153m previously guided due to the Boeing MAX delivery delays.  Costs will increase as our fuel bill grows by €450m and, as previously guided, we expect ex-fuel unit costs will rise by just 2pc.  This guidance remains heavily dependent on close-in Q2 fares, H2 prices, the absence of security events, and no negative Brexit developments in H2.”






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