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Ryanair blames strikes for profit slump

Ryanair aircraft

Ryanair has reported a 7 per cent drop in profits for the first half of the year, blaming ongoing strikes by pilots and cabin crew and air traffic control (ATC) walk-outs and staff shortages.

The airline had already warned that its profits would take a hit this year due to the strikes and higher fuel prices. As it predicted, average fares fell 3 per cent to €46, driving profits down to €1.2 billion (compared to €1.29 billion in H1 2017).

However, Ryanair’s traffic grew by 6 per cent and it maintained a 96 per cent load factor, while its ancillary revenue, including baggage fees, grew 27 per cent to €1.3 billion.

The carrier increased its share in start-up airline Laudamotion to 75 per cent, and although it lost €150 million Ryanair says it is working with Laudamotion to ‘improve cost control’ and hopes to see higher revenues next year.

While the airline has signed agreements with pilot and cabin crew unions in Ireland, the UK, Italy, Portugal and Germany this year, it faces several more days of strikes by staff in Belgium through the end of the year.

CEO Michael O’Leary also said repeated strikes and staff shortages across the continent have led to “the worst year on record for European ATC disruptions”. He blamed the issue for Ryanair’s decline in punctuality to 75 per cent.

Ryanair and International Airlines Group (IAG) lodged an official complaint to the European Commission regarding the ATC problems earlier this year, saying strikes pose a “costly” threat to airlines.

The airline has maintained its revised profit guidance for the financial year of €1.1 billion to €1.2 billion, excluding Laudamotion. It expects fares to fall by 2 per cent, as well as a 1 per cent drop in winter capacity and a €460 million increase in fuel costs.

O’Leary commented: “This full year guidance remains heavily dependent on air fares not declining further (they remain soft this winter due to excess capacity in Europe), the impact of significantly higher oil prices on our unhedged exposures, the absence of unforeseen security events, ATC and other strikes, and the impact of negative Brexit developments.

“We cannot rule out further base closures or capacity cuts this winter if oil prices rise or air fares fall further. Winter trading may be positively impacted by the rate and timing of other airline failures, which is already creating a ready supply of well trained pilots and cabin crew for summer 2019 growth.”

The airline is currently facing backlash from the public after a video taken on one of its flights showed cabin crew apparently allowing a passenger to stay on board after he shouted racial abuse at another customer.

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