Ryanair has warned that summer fares could be much lower than last year after profits fell almost 50%. The airline cited more frugal passengers, the timing of Easter holidays and a continued deterioration of pricing as reasons for the slump. Ryanair’s profit before tax fell 46% to €401m ($448m) in Q1 2019. Average passenger fares dropped by 15% in the period. Ryanair had previously expected fares to be “flat to modestly up” between July and September, but now says it expects them to be “materially lower”.
Shares in Ryanair fell 17% in early Monday trading, alongside other airlines such as EasyJet and Wizz Air. Experts are now questioning whether the wider airline sector will be affected by squeezed customer budgets during peak travel periods. Ryanair’s CFO, Neil Sorahan, brushed off the impact of Ryanair’s weak performance so far this year stating that he thought that consumers were just being “a little bit more frugal, a bit more cautious” with their money.
Despite the fall in profits, Ryanair’s passenger numbers increased slightly. The decline in overall revenue was limited to just 1%. Ryanair warned that its performance over the rest of the summer was “totally dependent” on more last-minute bookings, corresponding to August and September in particular. People are waiting longer than usual to book summer holidays, which some are blaming on the effects of the cost-of-living crisis.
Ryanair is also facing delays to its order of an additional 737 Max planes as Boeing plans to delay some deliveries set to take place by next spring until the summer of 2025. Last January, the aircraft maker was put under intense scrutiny after a door panel in one of its planes blew out, forcing the jet to land. Ryanair, nonetheless, says it continues to work with Boeing and noted an “improvement in the quality and frequency of deliveries”.
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