MIAMI – Ryanair has publicly announced that its profits have suffered a decline of 29% to €1.02 billion despite traffic growth, together with the imminent delay in upcoming Boeing 737 MAX 200 deliveries.
According to the ultra-low-cost carrier, to counter the traffic increase, fares suffered a declined of 6%, whereas higher fuel and staff costs forced the airline to report a drop in profits.
Laudamotion, Ryanair Sun
After Ryanair group’s acquisition of Laudamotion, the airline posted a loss of €139 million in year one. These losses were due to late releases of the summer 2018 schedules and expensive short term leases for aircraft.
Within the next two years, Ryanair plans to grow the Lauda fleet to 35 Airbus A320s.
In addition to the acquisition of Laudamotion, Ryanair launched Ryanair Sun (or “Buzz” going forward), a small division of five aircraft on the Polish market.
The main role thus far has been for charter flights to and from Poland. However, during the next year, the fleet will be increased to 25 aircraft, seven of which are for the charter area of the operation.
Ryanair has seen competitors leave several of its bases, the most noticeable being from Norwegian—including Rome, Las Palmas, Palma, Tenerife, Edinburgh, and Belfast. Up next is Norwegian’s Dublin base, which will see a substantial drop from six to one aircraft in October.
Boeing 737 MAX 200
To continue with the announcement, the airline has confirmed that it will delay its first Boeing 737 MAX 200 delivery until the winter of 2019.
However, as with the whole of the MAX program, this is subject to change if the current issues are not solved by then.
Commenting on the financial results, Michael O’Leary said this result was within guidance. “As previously guided, Ryanair (excl. Lauda) reports a full year after tax profit of €1.02bn. Short-haul capacity growth and the absence of Easter in Q4 led to a 6% fare decline, which stimulated 7% traffic growth to over 139m (142m guests incl. Lauda),” he said.
“Ancillary sales performed strongly up 19% to €2.4bn, which drove total revenue growth of 6% to €7.6bn.”
Ryanair’s board also approved €700 million of share buybacks, to start later this week and continue for at least nine months, with the possibility of 12 months.
The carrier remains cautious for its Financial Year 2020 financial results. It estimates an 8% rise in traffic. While fares are expected to continue declining, the increased traffic should offset some of this; however, the fuel bills will jump by €460 million, according to the carrier.
The next year will be an interesting time for Ryanair, with expansion plans partially based upon an unproven aircraft with a damaged reputation.
But with a profit of over €1bn, Ryanair is certainly in no risk of going under anytime soon.