O’Leary issues jobs warning to Buzz
And it now looks likely that up to 100 jobs will be lost at Stansted-based Buzz within the next few months.
Speaking to analysts as Ryanair announced its third quarter results to December 31, 2002, Mr O’Leary said he expected staff at Buzz to comply with Ryanair’s way of working.
The cheap seats airline just last week acquired Buzz from KLM for a net price of around €5 million when Buzz’s cash reserves of 19m are factored in. The company announced traffic growth of 46% to 3.9 million and a rise in net profits of 50% to €43.2m. The average load factor grew from 79% to 86%, mostly due to an 8% drop in fares and a number of free seats promotions.
Ryanair also said it expects to fly some 24 million passengers next year, which would see it challenge Air France for the position of third-largest airline in Europe.
Chief financial officer Michael Cawley said a firm announcement would be made at the end of this month about the future of Buzz routes and staffing. He said he believed jobs would be lost at Buzz, which has lost 30m in each of the last two years.
One of two things could happen: some jobs could be lost and the rest secured if staff adopted Ryanair’s low-cost policies, or the airline could be closed down entirely, he said. Around 550 people currently work for Buzz.
Mr Cawley said he was delighted with Ryanair’s performance for quarter three in terms of profit and passenger growth and increased load factors.
The company has upped its full-year profit guidance by €5m.
Asked whether he believed Ryanair could now do no wrong, Mr Cawley said: “I wouldn’t go that far, because the day we believe that is the day we are in trouble.”
Mr Cawley said Ryanair had consistently been able to offer the lowest airline fares because it had the lowest cost base and others who tried to beat it on price would not do so.
Ryanair will take its first flights from its new base in Milan this Thursday and will open another hub in Stockholm in April. The company has firm orders for 125 new Boeing 737s and has options on 125 more aircraft.
Mr O’Leary said Ryanair had produced another good set of numbers, which resulted from the “disciplined” way it was rolling out its low fares all over Europe.
“They again highlight the difference between Ryanair and other so-called ‘low fare’ carriers in Europe. We continue to earn increasing profits even during the winter period, when others have confirmed that they will suffer losses.
“Ryanair’s reducing cost base enables us to continue to drive down air fares. Lower fares mean higher load factors on our new larger aircraft, whose lower operating costs in turn result in increased profits. This is a virtuous cycle of lower costs, lower fares, faster growth and increasing profits.”
Mr O’Leary said he was not concerned by a recent newspaper report that Ryanair chairman David Bonderman had expressed interest in buying Aer Lingus.
Aer Lingus was a “very small” business and neither investors nor management would be worried if Mr Bonderman led a bid, he said.
