Ryanair profits take 29% hit amid falling ticket prices

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Ryanair’s full-year profit fell by almost one-third as short-haul capacity growth led to a decline in ticket prices, the airline announced this week.

Profits in the year ending 31 March were at €1.02bn (£898.7m), 29 per cent lower than the previous year, the Dublin-based carrier said in an earnings statement.

In the statement, Ryanair chief executive Michael O’Leary said: “As previously guided, Ryanair reports a full year after tax profit of €1.02bn (£898.7m), excluding Lauda. Short-haul capacity growth and the absence of Easter in Q4 led to a 6 per cent fare decline, which stimulated 7 per cent traffic growth to over 139m (142m guests incl. Lauda).  Ancillary sales performed strongly, up 19 per cent to €2.4bn (£2.1bn), which drove total revenue growth of 6 per cent to €7.6bn (£6.7bn).

“Revenues rose 6 per cent to €7.6bn (£6.7bn) due to 7 per cent higher traffic, a 6 per cent cut in average fares to €37 (£33), while Ryanair Labs continues to stimulate ancillary sales growth with spend per guest up 11 per cent to over €17 (£15).  Priority boarding and reserved seat services grew strongly.”

Despite the overall fall in profit, Ryanair still has the lowest unit costs of any EU airline, and the cost gap with its European competitors continues to widen. Indeed, the airline reported that its airport costs are 35 per cent lower than its nearest competitor.

2020 – cause for concern?

Ryanair’s outlook for fiscal year 2020 remains cautious on pricing. Though the airline expects traffic to grow by 8 per cent to 153m, its fuel bill is set to jump by another €460m (£405m), and ex-fuel unit costs will rise by 2 per cent, mainly due to a stronger sterling.

In addition, the delivery of its first Boeing 737 MAX aircraft has been delayed to winter 2019 (subject to regulatory approval by the EASA), meaning the airline will “not see any meaningful cost-benefit” until its 2021 fiscal year. Despite this, significant unit-cost savings are expected to be generated by the aircraft for the next five years, with the airline saying, “We continue to have utmost confidence in these aircraft which have 4 per cent more seats, are 16 per cent more fuel efficient and generate 40 per cent lower noise emissions.”