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Abu Dhabi, UAEWednesday 12 December 2018

Ryanair posts slide in profits for third quarter

Europe's largest low-cost carrier hit by higher fuel costs and industrial action

Strikes and higher fuel costs have hit Ryanair's earnings. Reuters
Strikes and higher fuel costs have hit Ryanair's earnings. Reuters

Ryanair reported a 7 per cent fall in profit during its key April-September season on Monday, citing higher fuel costs and damage to bookings caused by strikes, and said European short-haul airfares would remain soft this winter.

Ryanair three weeks ago cut its forecast for full-year profit by 12 per cent and warned that worse may follow if a recent wave of pilot and cabin crew strikes across Europe continue to hit traffic and bookings.

Europe's largest low-cost carrier has struggled with labour relations since it bowed to pressure to recognise trade unions for the first time last December. It said it hoped to finalise more union agreements in the coming months but could not rule out further industrial action.

Shares of Ryanair, which is also counting the cost of stubbornly high fuel prices, closed on Friday at €11.51, down 20 per cent compared to three months ago and down 40 per cent from a peak of €19.39 in August last year before its staff problems emerged.

Ryanair, which traditionally makes most of its profit in the summer, reported a profit of €1.2 billion (Dh5.07bn) in the six months to Sepember. 30. It reiterated its full-year profit forecast of between €1.1bn and €1.2bn.

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That would represent a 17 to 24 per cent fall from the record €1.45bn post-tax profit booked in its most recent financial year to March 31.

A poll of more than 10 analysts by Ryanair ahead of the results found an average forecast of €1.12bn for the full year and €1.17bn for the six months to September 30.

"This full-year guidance remains heavily dependent on air fares not declining further - they remain soft this winter due to excess capacity in Europe [and] the impact of significantly higher oil prices on our unhedged exposures," Ryanair chief executive Michael O'Leary said.

But he said Ryanair's cost advantage over rivals is widening and "over the medium term, consolidation will create growth opportunities for Ryanair's lowest fare/lowest cost model".