Ryanair slipped to a quarterly loss of €19.6m (£17.2m) after competition pushed down air fares across Europe – and the company has reiterated a warning that Brexit developments could further drag on profits.
The budget airline fell into the red for the three months to the end of December, compared to a profit of €105.6m (£92.4m) in the same period a year ago, and said the risk of a no-deal departure from the EU remained “worryingly high”.
It argued that a recent fall in oil prices would do nothing to lift the gloom – as it would help failing rivals stagger on in an already-overcrowded market, helping to keep prices low.
Shares in Ryanair were 5% lower in mid-morning trading while rival easyJet dropped nearly 2%.
The third-quarter loss came despite passenger numbers growing by 8% to 30.4 million and revenues climbing 9% to €1.53bn (£1.34bn).
Chief executive 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.”
Average fares fell 6% “due to excess winter capacity in Europe” while there were also higher staff costs including 20% pilot pay increases and more passenger compensation due to air traffic control disruption.
Ryanair’s third-quarter results come weeks after it warned that full-year profits would be hit by the squeeze on fares.
The airline reiterated the same guidance in its latest release, saying it expects full-year profits of €1bn – €1.1bn (£880m-£960m), excluding its recently acquired loss-making Austrian carrier Laudamotion.
It also again said that it could not rule out further cuts to its guidance “especially if there are unexpected Brexit and/or security developments which adversely impact fares for close-in bookings between now and the end of March”.
Mr O’Leary said: “The risk of a no-deal Brexit remains worryingly high.
“While we hope that common sense will prevail, and lead either to 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 has already obtained a UK licence to protect domestic routes and has also temporarily made changes to its share voting rights structure so that it remains an EU owned and controlled business.
The airline added that it “did not share the recent optimistic outlook of some competitors that summer 2019 air fares will rise”.
Recent months have seen the collapse of a number of smaller rivals as well as turbulence for the likes of Flybe.
Ryanair said that with oil prices falling, some competitors would be able to survive longer, resulting in excess capacity throughout the year “which will, we believe, lead to a weaker – not stronger – fare environment”.
The airline also announced a shake-up of its structure and that Mr O’Leary has agreed a new five-year contract as chief executive to take him through to July 2024.
(c) Sky News 2019: Ryanair slips into the red as fares fall bites