MIAMI – Irish Low-Cost Carrier Ryanair has reported a 21% drop in its Q1 profits report, about €243 million. The airline blames higher fuel and staff costs.
The revenue drop has arisen from a variety of factors, with two poor-performing markets and the delay in deliveries of the carrier’s Boeing 737 MAX 200 being a dominant force in this.
The two weakest markets for Ryanair were Germany and the UK. With the former, the sale of Air Berlin to German carrier Lufthansa played a major impact on Ryanair’s poor performance.
In Germany, Lufthansa sold most of its excess capacity at below-costs prices, whereas the uncertainty over BREXIT has affected not just the value of the British Pound but also created what the airline is calling “negativity on consumer confidence and spending.”
Despite the drop in revenues, the airline did report an increase in passengers traveling. The airline carried 41.9 million passengers this last year—a rise of 11% compared to the previous year, which logged 37.6 million passengers.
In addition to this increase in passengers, the airlines’ load factor was flat at 96% year on year.
737 MAX Delays, Consolidation of Lauda Air
The rising costs in fuel saw the airline receive an increase of 24% on its year on year fuel bill, which is an increase of up to €150 million.
While it is not listed in the Q1 report, the airline did say that the fuel costs rose by 4%. This means that the airline has seen a drop in profits twice in 2019.
Ryanair had initially hoped to receive its first batch of Boeing 737 MAX 200 aircraft, which would have provided a 16% better fuel burn over its current fleet, helping reduce the airline’s fuel costs.
It is now clear that the result of the grounding of the MAX is starting to be felt by airlines in Europe, with Ryanair saying, “The delivery of our first 5 B737-MAX aircraft has been delayed from Q1 to probably January at the earliest (subject to EASA approval).”
“We now expect to receive only 30 MAX deliveries in time for S.20 (previously 58) which will cut Ryanair’s S.20 growth rate from 7% to 3% (162m to approx. 157m guests in FY21),” said the airline.
“We have great confidence that these “gamechanger” aircraft (which have 4% more seats, but burn 16% less fuel and have 40% lower noise emissions) will transform our costs and our business. Due to these delivery delays, we will not now see these cost savings delivered until FY21.”
Still Good News
Despite the revenue drops and the issues faced in Germany and the U.K., Ryanair has still had a good Q1.
The first quarter saw Ryanair acquire the fourth airline into the group (Malta Air), as well as opening 239 new routes and four new bases in Bordeaux, Marseille, Southen, and Berlin.
It would appear then that despite the issues faced by the airline, Ryanair is moving forward to combat the struggles that face the airline in the coming year.