Ryanair H1 Profit Up Despite Cancellations

Ryanair reported an 11 percent first half net profit increase and maintained its full year profit forecast despite a pilot shortage causing extensive flight cancellations.

Net profit for the six months to end September was EUR€1.29 billion (USD$1.5 billion), from last year’s €1.17 billion, even after cancellations affected 700,000 passengers during the period.

“While we deeply regret these flight cancellations and winter schedule changes, and the disruption they caused… we have worked hard to re-accommodate or refund all affected customer requests within 18 days of notifying them,” chief executive Michael O’Leary said.

A change in pilot annual leave year from April-March to January-December from 2018, added to a shortage of pilots, led to “over-allocated calendar months of annual leave to over half our pilots in September, October, November and December,” the airline said. Overall, the airline has cancelled 20,000 flights.

In October, Ryanair announced the appointment of Malaysia Airlines chief executive Peter Bellew as chief operations officer, with specific responsibility for pilots, as part of a flight and ground operations and engineering role.

First half revenue increased 7 percent to €4.42 billion as passenger spend rose 2 percent on optional services such as reserved seats, priority boarding and car rental. Unit cost fell 5 percent, but excluding fuel it was flat.

During the six months, the Dublin-based airline carried 72.1 million passengers, an increase of 11 percent on the same period last year.

The airline said it would react to opportunities for growth caused by European airline consolidation. With Alitalia, Monarch Airlines and Air Berlin entering insolvency proceedings, O’Leary said Ryanair would continue to grow in Germany, the UK, and Italy, where it is poised to be the main beneficiary of the reduction in Alitalia’s short haul services.

There is “continuing uncertainty surrounding the terms of the UK’s departure from the EU in March 2019. There remains a worrying risk of a serious disruption to UK-EU flights in April 2019 unless a timely UK-EU bilateral is agreed in advance of September 2018,” the airline warned.

O’Leary said the grounding of 25 aircraft will slow second half growth to 4 percent, and reduce the full year forecast for passenger numbers by 2 million to 131 million. Full year unit costs are expected to fall by around 2 percent this year, but ex-fuel unit costs will increase by 3 percent.

The low cost carrier maintained its full year after tax guidance in the range of €1.40 billion to €1.45 billion, “heavily dependent on close-in H2 bookings, the absence of any further security events, ATC strikes or negative Brexit developments.”