Ryanair warns on profits as oil prices rocket and strikes bite

Ryanair on Monday admitted a catalogue of woes including rising oil costs and a series of strikes have hit profits at the no-frills airline.

The Irish carrier, led by outspoken Michael O’Leary, warned that full-year profits are expected to be 12% lower than the €1.25 billion to €1.35 billion (£1.1 billion to £1.2 billion) forecast, and come in between €1.1 billion and €1.2 billion.

The airline suffered lower traffic and weaker fares in September because of a number of pilot and cabin crew strikes in Germany, Holland, Belgium, Spain and Portugal. That drove fares down in the third quarter as customers feared further industrial action.

The Dublin-headquartered business said that higher oil costs were also a problem as Brent crude soared, hitting a four-year high of $83.32 today, ahead of US sanctions against Iran.

O’Leary said: “We have decided to trim our winter 2018 capacity (by 1%) in response to this lower fare, higher oil and higher cost environment.”

He said Ryanair would remove some aircraft from its Eindhoven, Bremen and Niederrhein bases.

The firm spooked investors further by warning it cannot rule out further disruptions in the third quarter “which may require full year guidance to be lowered further”. The warning comes as Brits book their Christmas travel.

Shares in Ryanair fell €1.08, or 8.3%, to €12.02. Investors also exited rival airlines: easyJet and Wizz Air both fell.

Cantor Fitzgerald analyst Robin Byde said: “Ryanair has a tough couple of quarters ahead with bookings and fares under pressure, and rising fuel costs squeezing margins as current hedging positions mature.” 

These headaches are the latest in a set of woes for Ryanair which date back to September last year when a rota fiasco caused pilot shortages and 20,000 flights to be cancelled. As a result, Ryanair sweetened contracts and recognised some trade unions.

O’Leary last week labelled as “fake news” a new, unauthorised biography published about him — Turbulent Times for the Man Who Made Ryanair — in which he was described as “ruthless”.

Remainer O’Leary has also warned that Brexit could mean some flights could stop from April.