In the face of recent backlash by customers affected by a wave of cancellations over a pilot roster mistake, Ryanair saw growth in both passenger numbers and profit in the first half of the year.
The low-cost carrier posted an 11 per cent rise in passenger traffic compared to 2016, saying it achieved a load factor of 97 per cent over the summer. The airline attributes its increase in passengers to a 5 per cent reduction in airfares, which it claims saved customers more than €160 million in the first half of the year.
Potentially owing to this growth in traffic, Ryanair said its profit after tax also increased 11 per cent to just under €1.3 billion. While fuel prices dropped 3 per cent, the airline’s unit costs were flat, which boss Michael O’Leary claims is due to the company having to pay €25 million in EU261 compensation to “quickly address the needs of affected customers in September to recover the rostering failure”.
Commenting on the failure of Monarch and Air Berlin, as well as the continuing administration process at Alitalia, O’Leary said Ryanair believes other European airlines will follow. He commented: “We are responding to these opportunities by continuing to grow in Germany, where Lufthansa’s purchase of Air Berlin gives them an anti-competitive 95 per cent share of the large German domestic market.”
O’Leary said Ryanair will add more aircraft to its UK bases to cover any gaps left by Monarch’s collapse and plans to increase operations in Italy, where it is “poised to be the main beneficiary of the inevitable contraction of Alitalia’s short-haul services.” He also called on the government to develop strategies to protect airlines’ ability to operate within the EU post-Brexit, a worry that has been echoed throughout the industry.
Finally, O’Leary said he believes the grounding of 25 aircraft will slow growth in the second half of the year but not eliminate it, estimating there will be no need to revise the airline’s profit guidance of €1.4 to €1.45 billion.
Commenting on Ryanair’s statement, Fiona Cincotta, senior market analyst at City Index, said: “These strong first-half numbers are no big surprise, given the staffing debacle didn’t really start biting until the tail end of the reporting period. Crucially, Ryanair has kept its annual earnings guidance intact, suggesting management believes it can keep personnel costs under control.”