Business

Profits slump by more than a quarter at Ryanair in turbulent times for aviation industry

Ryanair's full year profits fell 29 per cent to €1.02 billion (£890 million), according to the firm's latest accounts

SHARES in Ryanair have taken a battering after the airline unveiled a hit to profits amid turbulence in the aviation industry.

The group's full year profits have fallen 29 per cent to €1.02 billion (£890 million).

The company saw traffic growth of 7 per cent and a decline in fares of 6 per cent in the year to March 31 2019.

Revenues at the low-cost airline grew 6 per cent to €7.56bn (£6.6bn) over the same period.

Shares in the firm were down 4.4 per cent to €10.33 in early trading yesterday.

Michael O'Leary, chief executive of Ryanair, said he is expecting "broadly flat group profits" into the financial year ending in 2020 - when their reporting will include Lauda in the consolidated Ryanair Group - but this is dependent on "no negative Brexit developments".

The company said: "Assuming revenue per passenger (RPP) growth of 3 per cent, we are guiding broadly flat Group profits.

"This will range from €750m (£660m) if RPP rises 2 per cent, up to €950m (£830m) if RPP rises 4 per cent.

"This guidance is heavily dependent on close-in peak summer fares, H2 prices, the absence of security events, and no negative Brexit developments."

Russ Mould, investment director at AJ Bell said rising costs in the wider airline sector were impacting the company.

"Times are tough for the travel industry," he said.

"Brexit is affecting consumer sentiment, appetite for travel and the operating environment for the airlines themselves. If that weren't enough, oil prices are on the rise and excess capacity is adding to the pressure on profitability."

The company also said it had delayed the delivery of five Boeing 737-Max aircraft until winter - with no meaningful cost benefit from the delivery expected until the financial year ending in 2021.

It said: "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."

Two Boeing 737-Max aircraft crashes - one in Ethiopia in March and another in Indonesia in October - killed 346 people, leading to the aircraft being temporarily grounded.

Michael O'Leary, chief executive of Ryanair, said: "As previously guided, Ryanair (excluding Austrian low-cost airline Lauda) reports a full year after tax profit of €1.02bn (£890m).

"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 139 million (142 million guests including 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 (£6.6bn)."

The board of the company has also approved a €700m (£610m) share buyback which will commence later this week and run over the next year.

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