Ryanair reports full year profit

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 21, 2018 15:29

Ryanair reports full year profit

Ryanair has reported a 10% increase in full year profit after tax to €1.45bn, as lower fares (down 3%) stimulated 9% traffic growth to over 130m guests, and a load factor of 95% load factor.

Ryanair’s CEO Michael O’Leary said that he was pleased to report the 10% increase in profit and unchanged profit margin despite a 3% cut in airfares “during a year of overcapacity in Europe, leading to a weaker fare environment, rising fuel prices, and the recovery from our Sept. 2017 rostering management failure.”

Ryanair says that it expects above average EU capacity growth to continue into FY19 but that will have a downward effect on fares. 

During FY18, Ryanair took delivery of 50 new B737s, and increased its Boeing order to 135 firm MAX-200s, with a further 75 under option (210 in total). The low cost carrier opened four bases in Burgas, Memmingen, Naples & Poznan and launched over 260 new routes. 

Ancilliary revenue rose by 13% over the past fiscal year, driven by Ryanair Labs, which is driving sales via “MyRyanair” membership and its website & app. 

“Our improved mobile and digital platforms have delivered a 13% increase in ancillary revenues (+4% per guest) to over €2bn. Ancillaries now deliver 28% of revenue and we are well on track to achieve our 5 year goal of 30%. More guests are switching to our great value “plus” fares, reserved seating, priority boarding, and car hire. Ryanair Rooms penetration is rising steadily, albeit from a low base, as our guests recognise our unique combination of lowest hotel prices and travel credits.”

Over the last year, Ryanair’s on-time performance has declined by 2% from 88% to 86% due to increased ATC delays due to strikes and staffing/capacity shortages mainly in France, Germany and Italy, says the airline. 

In FY18, unit costs – helped by fuel hedging – fell by 1%. Even as traffic grew 9%, ex-fuel unit costs rose 3% mainly due to one-off EU261 costs arising from Sept. 2017 cancellations, and higher H2 staff costs as Ryanair agreed substantial pay increases and five year pay deals with pilots and cabin crew. “We expect the market for experienced pilots in Europe to remain tight for the next 12 months, and accordingly, this will continue to put upward pressure on staff costs for all EU airlines,” says the airline.  

Fuel is highlighted as a major cost headwind for the next 24 months and Ryanair confirmed it is 90% hedged for FY19 at approx. $58pbl. 

Ryanair reiterated its concerns regarding the impact of a hard Brexit. “While there is a general belief that an 18 month transition agreement from March 2019 to December 2020 will be implemented and further extended, it is in the best interest of our shareholders that we continue to plan for a hard Brexit in March 2019,” it said. “In these circumstances, it is likely that our UK shareholders will be treated as non-EU and this could potentially affect Ryanair’s licencing and flight rights. Accordingly, in line with our Articles, we intend to restrict the voting rights of all non-EU shareholders in the event of a hard Brexit, so that we can ensure that Ryanair is majority owned and controlled by EU shareholders at all times to comply with our licences. This would result in non-EU shareholders not being able to vote on shareholder resolutions. In the meantime, we have applied for a UK AOC which we hope to receive before the end of 2018.”

Ryanair says that its outlook for FY19 is on the “pessimistic side of cautious”. Traffic is expected to grow by 7% to 139m, with flat load factors of 95%. Unit costs this year will rise 9% due to higher staff and oil prices which will, when adjusted for volume growth, add more than €400m to the fuel bill. Ex-fuel unit cost will rise by up to 6% as pilot and cabin crew pay increases annualise. 

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 21, 2018 15:29