Ryanair has today reported a €20 million loss in Q3, excluding expected full-year startup costs for Laudamotion which are currently estimated to hit as much as €140 million. The Dublin-based airline laid the blame for the loss mainly at a6% decline in average airfares, although admitted that a healthy 26% rise in ancillary revenues had been wiped out by higher fuel costs, EU261 compensation payouts and ongoing staff issues.
“While a €20m loss in Q3 was disappointing, we take comfort that this was entirely due to weaker than expected airfares so our customers are enjoying record low prices,” commented Ryanair’s chief executive, Michael O’Leary.
The announcement comes just weeks after Ryanair issued a rare profits warning. In January, the low-cost airline lowered its full-year guidance by as much as €100 million from €1.2 billion to a new estimate of €1.1 billion. New Guidance now suggests that profits could be as low as €1 billion. At the time, O’Leary said Ryanair was reacting to overcapacity in Europe with an aggressive pricing strategy.
O’Leary suggested he was willing to suffer a fall in profits in order to “shake out” loss-making competitors and claims Ryanair’s aggressive pricing strategy was directly responsible for Norwegian closing bases in Rome, Gran Canaria, Tenerife and Palma.
And there could be even more losses to come. The airline explained:
“While we have reasonable visibility of our Q4 bookings, we cannot rule out further cuts to airfares and/or slightly lower full-year guidance especially if there are unexpected Brexit and/or security developments which adversely impact fares for close-in bookings between now and the end of March.”
Ryanair blamed a drop in oil prices for allowing “loss-making competitors” to survive longer.
Boardroom shakeup
In another major announcement, the airline also announced plans for controversial Chairman David Bonderman to step down from his position in September 2020. Bonderman faced a concerted effort by unions and some investors to unseat him from his position at the company’s last annual general meeting. They said Bonderman had overseen “a corporate culture which for two decades was virulently anti-union” and that if Ryanair was “serious about engaging with workers and unions then the time has come for fresh leadership.”
Michael O’Leary has also said that he will take on a new role as group chief executive, leading three airline brands – Ryanair, Ryanair Sun (a Polish subsidiary) and Laudamotion. The five-year contract ends speculation that O’Leary will retire anytime soon, especially given the fact that he had suggested to wanted to renew his contract on a yearly basis.
