Photo: Ryanair

LONDON – Ryanair released financial data relative to its first half of 2018, recording a 7% fall in profit down to €1.20 billion (excluding the losses of Laudamotion).

Average fares dropped by 3% due to excess capacity in Europe, meaning that price battles became more prevalent in the industry.

Other reasons for the profit drops featured an earlier Easter in Q1, as well as repeated ATC strikes/staff shortages that caused a spike in cancellations of higher fares.

Higher fuel, staff and EU261 compensation costs have also offset strong ancillary revenue growth.

(Credits: Fabrizio Berni)

Despite profits dropped, the airline recorded revenue growth by 8% eight from €4.43 billion to €4.79 billion, with passenger numbers growing by 6% from 72.1 million to 76.6 million.

Net margins decreased from 29% to 25%, representing a 4% decrease on that front.

These reports are excluding the €45 million exceptional loss forecasted for the first half of the 2019 financial year.

Ryanair’s Chief Executive Officer Michael O’Leary commented on this profit drop and blamed it on what was seen as a negative summer for the carrier.

“As recently guided, H1 average fares fell by 3%. While ancillary revenues performed strongly, up 27%, these were offset by higher fuel, staff and EU261 costs.”

“Our traffic, which was repeatedly impacted by the worst summer of ATC disruptions on record, grew 6% at an unchanged 96% load factor.”

The carrier recorded highlights recorded in the first half of the year. Load factors are currently being recorded at 96%, with fares falling three per cent to €46 per ticket.

Ancillary revenue grew by 27% to €1.3 billion. Agreements with unions across Ireland, the UK, Italy, Portugal, and Germany are all signed, preventing future strikes.

The carrier also increased its holding in Laudamotion to 75% as well as taking delivery of 23 new Boeing 737-800s.

Ultimately, in the vast amount of information provided, Ryanair added more details regarding BREXIT and its plans for contingency.

The carrier mentioned that the risk of a no-deal BREXIT is rising. On that basis, it is hoping that the 21-month transition period from March 2019 to December 2020 will increase as the time to complete agreements is “shortening.”

The carrier will be acquiring a UK Air Operator’s Certificate (AOC), in which approval is expected by the end of 2018 to protect the three domestic UK routes that are under Ryanair’s operation.

Overall, it seems that still the strikes are damaging the carrier, to the point that it is touching its profits.

It will be interesting to see what level of financial damage will be implemented when the United Kingdom leaves the European Union and whether it will reduce profits even further.

For now, all we can do is watch to see whether the Irish low-cost carrier can recuperate any lost ground going into the next six to 12 months.