Monday 22 October 2018 8:07 am

Ryanair profits slide as strikes, cheaper fares and higher fuel costs impact bottom line


Ryanair saw half-year profits decline this morning to round off a troubled few days at the budget airline.

The results

Cheaper fares, higher fuel costs and strikes all hit Ryanair’s bottom line, taking post-tax profits down seven per cent year-on-year to €1.2bn (£1.1bn) for its crucial April to September trading period.

Read more: Photo of Ryanair crew sleeping on airport floor was staged, airline says

However, revenue actually grew eight per cent to €4.79bn compared to the same period in 2017, as passenger numbers climbed six per cent to 76.6m, with Ryanair cutting fares by three per cent to under €46.

It also returned €540m to shareholders via buybacks, though earnings per share fell seven per cent to €0.99.

However, shares were up more than four per cent in early morning trading as investors eyed an opportunity to stock up in the hope that the firm's value would once again rise.

Why it’s interesting

Flight compensation from strikes, slashed airfares and fuel prices all contributed to a weak half-year set of results for Ryanair, after a week which saw it cause controversy by deciding not to remove a passenger from one of its flights amid an alleged racist incident.

Industrial action meant on-time flights fell from 75 per cent and 86 per cent over Ryanair’s six months trading period.

Boss Michael O’Leary pointed out that passenger numbers have grown despite the airline’s recent troubles, while ancillary revenues like luggage fees rose to €1.3bn.

But excess capacity across Europe means prices remain soft, the firm warned in unchanged full year guidance that the airline slashed just three weeks ago. Currently it expects full year profits of between €1.10bn and €1.20bn, but predicts fares will fall by a further two per cent in the second half of the year following a weak October half-term and Christmas.

Read more: Hard Brexit could ground planes for three weeks, warns Ryanair boss

Fuel will cost Ryanair €460m more than it did last year while it said both strike action and “negative Brexit developments” meant it “cannot rule out” closing more bases or reducing capacity. However, the closure of other airlines like Primera Air may gift Ryanair a bounty of well trained pilots and cabin crew, it said.

What Ryanair said

Boss O’Leary said:

"As recently guided, H1 average fares fell by three per cent. While ancillary revenues performed strongly, up 27 per cent, these were offset by higher fuel, staff and EU261 [flight compensation] costs. Our traffic, which was repeatedly impacted by the worst summer of ATC disruptions on record, grew six per cent at an unchanged 96 per cent load factor.”

What analysts said

"Life doesn’t seem to be getting worse," said Russ Mould, investment director at AJ Bell. "A decline in profit isn’t a surprise given it had already laid the foundations for a bad set of numbers in a previous trading update. Instead, the market is breathing a sigh of relief that full year earnings guidance hasn’t had to be downgraded again.

“Nevertheless, Ryanair is still treading a thin line given its warning that full year guidance is heavily dependent on air fares not falling further, plus other factors like the oil price and the impact of Brexit developments."


Martin Lane, managing editor of, added that Ryanair is suffering the consequences of strikes that may mean passengers are now choosing to avoid the risk of cancelled flights and hidden fees.

"We cannot ignore the fact that passengers could simply be taking their business elsewhere. Ryanair has had a raft of issues this year including pilot shortages, cabin crew strikes and a change of baggage policy, ultimately leading to extra costs for their customers," he said.

"Ryanair have a lot of work to do – not only do they need to get their profits back on track but they also have their work cut out to gain back customer trust and loyalty."

However, while Mould pointed out that Ryanair shareholders have lost 11 per cent on total returns over the last three years, Easyjet stock is down 27 per cent over the same period, while rival Flybe's shares have fallen 81 per cent.