‘Terror cloud’ hanging over earnings, says Ryanair chief Michael O’Leary

Ryanair is battling lower fares in the first months of its financial year, weighed down by French air-traffic controller strikes and by travellers’ concerns about a future terrorist incident following last month’s bombings in Brussels.

‘Terror cloud’ hanging over earnings, says Ryanair chief Michael O’Leary

“There is a kind of cloud hanging over our business,” chief executive Michael O’Leary said in an interview with Bloomberg Television yesterday.

“If there are no more terrorist events in Europe between now and mid-summer, I think things will return to normal, but there’s no doubt the pricing in my first quarter is affected by these air-traffic controller strikes and the concerns over people travelling, particularly on business.”

Earnings in the fourth quarter, to the end of March, were probably cut by €10m to €20m because of the strikes in France and subdued bookings in the wake of the terror attacks in Brussels, and those effects could last into the current quarter, Mr O’Leary said last week. The company will publish full-year figures in May.

The earlier timing of Easter will also damp first-quarter earnings, while carriers reaching the end of more expensive oil hedging agreements continue to add capacity, leading to “softer pricing”, he said yesterday.

The airline cancelled about 200 flights to Brussels in the wake of the March 22 terror attacks with the remaining services transferred to the carrier’s base at Charleroi. More than 500 flights were scrapped due to French strikes, he said.

The carrier is set to begin testing transfers between its own flights in the summer.

A separate agreement to align schedules with Norwegian Air Shuttle’s long-haul operations will set up feeder traffic between the carriers at London’s Gatwick Airport, particularly for Ryanair’s routes there serving Dublin and Belfast, as well as at Barcelona, Copenhagen, and Cork.

“We’ve talked to Norwegian Air,” said Mr O’Leary.

“We’ve reached an agreement in principle, now we’re into the details of aligning some of our booking systems with their booking systems” along with other technical work.

"A shift to an operating model that includes lining up with long-distance routes is an “inevitable development”, he said.

Transfers to established long-haul airlines could account for about 5% of Ryanair’s traffic by 2021, he said.

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