Ryanair has absorbed some additional costs and surrendered yield by cutting ticket prices to attract more passengers. The costs involved the price of staving off more disruption by newly unionised pilots, writes Eamon Quinn.
However, it still reported increases in revenues and profit in its latest quarter as it aimed to put an end to the most turbulent period in its history.
However, chief executive Michael O’Leary still told investors of potential trouble and appeared to throw down the gauntlet to pilots at key bases, a warning which observers believe was directed at Dublin aircrew not to press for excessive salary rises that would destroy the company’s low-cost business model.
“As we finalise union discussions among similar lines to that agreed in the UK, we expect some localised disruptions and adverse PR so investors should be prepared for same,” the company said.
Net profit climbed 12% to €106m in the three months to the end of December from a year earlier on an increase in revenues of 4% to over €1.4bn, despite a very challenging three months, the company said.
Ryanair continued to absorb a bit more of the extra salary costs it was forced to pay out following the widespread disruption of September and October when it was forced to cancel flights amid its self-inflicted pilots rostering fiasco.
Analysts were upbeat however, saying Mr O’Leary resorting to the airline’s custom of issuing cautious winter warnings only to beat earnings expectations over the airline’s most-profitable summer months.
Senior aviation analyst Mark Simpson at Goodbody said the airline was evidently dampening down full-year profit expectations while also alerting investors about the potential for more disruption.
Nonetheless, the airline had left its profit guidance for the full-year unchanged at up to €1.45bn, showing the unprecedented turmoil which had ended in it recognising unions for the firt time hadn’t set the airline off course.
“The Ryanair machine rolls on”, Mr Simpson said. “It [the third quarter] was a good quarter overall,” said Stephen Furlong at Davy. Ryanair’s full financial year extends to the end of March.
“While costs will rise next year — by over €300m in fuel costs and a further €100m added to staff costs — these were expected and we believe the competitive advantage in the market will be maintained,” Mr Furlong said. Ryanair said it plans to buy back €750m in shares, in a programme slated to start in February.
The shares ended 2.4% lower, compared with an Iseq fall of 1.9%.