1st Oct 2018 08:21
LONDON (Alliance News) - Ryanair Holdings PLC on Monday lowered its profit guidance for its current financial year due to strikes, lower traffic and higher oil prices.
Shares in Ryanair Holdings opened down 9.4% at EUR11.88 on the profit outlook cut.
Profit guidance for the year to the end of March 31, 2019, was lowered to a range of EUR1.10 billion to EUR1.20 billion, from EUR1.25 billion to EUR1.35 billion, as a result of lower traffic and weaker fares in September, caused by two years of coordinated strikes across Europe.
For 2018 financial year, pretax profit increased 10% year-on-year to EUR1.61 billion from EUR1.47 billion in 2017 financial year.
The budget airline also attributed the cut in profit guidance to increased care and re-acommodation expenses as a result of strikes and fall in forward bookings.
Fuel costs also rose as oil prices rose to USD82 per barrel, affecting 10% of volumes and unit Laudamotion's fuel bill. Fuel costs for the second half of the year are expected to be EUR460 million higher than the year before.
Fares for the second half of the year are guided to be down 2.0%, from its previous expectation of remaining flat from the year before, and slower traffic growth is expected to cut traffic for the full year to 138 million, from the previous guidance of 139 million.
In response to the lower fares, Ryanair will implement certain cuts to its winter capacity, with the closure of two bases in Germany, and a trimming of one bases from five aircraft to three.
Ryanair said it cannot rule out further disruptions in the third quarter ending December, which could see its profit guidance lowered even more.
"While we successfully managed 5 strikes by 25% of our Irish pilots this summer, 2 recent coordinated strikes by cabin crew and pilots across 5 EU countries has affected passenger numbers, close in bookings and yields, and forward air fares into Q3. While we regret these disruptions, we have on both strike days operated over 90% of our schedule. However, customer confidence, forward bookings and Q3 fares has been affected, most notably over the Oct school mid-terms and Christmas, in those 5 countries where unnecessary strikes have been repeated," said Chief Executive Officer Michael O'Leary.
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