Irish carrier Ryanair has reported a 29 per cent decline in profits for the year to 31 March, blaming a drop in fares and higher costs.

Total profit for the year was down to €1.02 billion compared to €1.45 billion in 2018 despite a 7 per cent increase in traffic. This was caused by a 6 per cent decrease in average fares.

Strong ancillary growth of 19 per cent was offset by a rise in fuel, staff and compensation costs, according to the carrier. This included a €200 million increase in employee cost partially owing to a 20 per cent pay rise for pilots.

Ryanair was also hit by a €50 million hike in EU261 compensation costs, which it blames on repeated air traffic control shortage disruptions across Europe.

The report comes after a year in which Ryanair became full owner of Austrian carrier Lauda. The airline said Lauda suffered “exceptional start-up losses of €139.5 million”. It said the subsidiary is starting FY2019-20 with a larger but lower-cost fleet of 23 A320 aircraft, with plans to grow this to 35 by summer 2020.

The airline also rebranded its Polish charter operation from Ryanair Sun to Buzz, with the carrier reporting a “modest” profit in its first year.

CEO Michael O’Leary claimed that “as weaker European airlines are sold or fail, airports are competing to attract Ryanair’s efficient, high load factor”.

The airline has delayed delivery of its first five 737 Max aircraft to this winter while Boeing works to release a software update for the planes after two fatal crashes. O’Leary said Ryanair still has the “utmost confidence” in the aircraft, which will provide 4 per cent more seats and greater fuel efficiency.

O’Leary said the airline expects fares to continue a downward trend through this summer, while it has ‘zero visibility’ for the second half of the financial year.

But O’Leary cautioned: “This guidance is heavily dependent on close-in peak summer fares, H2 prices, the absence of security events, and no negative Brexit developments.”

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