Airline grows rapidly in first quarter, with 7% rise in passenger numbers

This article is more than 2 years old

This article is more than 2 years old

Ryanair has warned staff planning a summer of strikes that efforts to secure improved pay and working conditions could put their jobs at risk, as it reported a 20% decline in first-quarter profit.

The no-frills airline continues to grow rapidly, reporting a 7% increase in passenger numbers to 37.6 million that pushed revenue up 9% to nearly €2.1bn (£1.86bn).



Ryanair pilots announce two further strikes for July Read more

However, soaring costs during the three-month period meant that after-tax profit slumped by 20% to €319m, sending its shares down as much as 5% in early trading.

The Dublin-based carrier blamed falling profits on factors including high fuel prices, overcapacity and labour disputes that it admitted were likely to continue over the peak summer period.

In a statement to the stock market, the airline warned staff that they could be made redundant if it cuts back operations in response to the disruption, which has resulted in 600 flights being cancelled already.

“If these unnecessary strikes continue to damage customer confidence and forward prices/yields in certain country markets then we will have to review our winter schedule, which may lead to fleet reductions at disrupted bases and job losses in markets where competitor employees are interfering in our negotiations with our people and their unions,” it said.

“We cannot allow our customers’ flights to be unnecessarily disrupted by a tiny minority of pilots.”

However, the International Transport Workers’ Federation, a trade union umbrella group acting on behalf of cabin crew, said Ryanair had been slow to recognise staff’s concerns.

“After the big announcement that they’d recognise unions and change human resources policy, progress has been slow and the style has been much the same,” the ITF civil aviation secretary, Gabriel Mocho Rodríguez, said.

“They’ve changed practices slowly but not their mindset. Instead of honest and fruitful dialogue, they’re thinking about the best way of blackmailing the unions to take them where they want.

“This is unacceptable and explains the difficulties workers are having.”



Ryanair’s tussle with cabin crew and pilots has lasted for months, with strikes due this week in important European markets, including Ireland, Spain, Portugal and Italy.



The aviation analyst Gerald Khoo, of stockbroker Liberum Capital, said further cancellations would weigh on revenues by driving down average fares.

“When there are strikes, they move passengers on to other flights and into seats that would have been sold at higher prices at the last minute,” he said.



But he added that it was in Ryanair’s interest to hold firm against union demands, in order to protect the low-cost model that gives it an advantage over rivals.

“They’re willing to endure industrial action because they need the right deals for the long term.

“Efficient working practices are why prices are so low, so they’re trying to make sure their advantage in terms of efficiency and productivity persists.”

Ryanair, which employs 14,000 people, also blamed its falling profits on fuel prices and staff pay rises introduced earlier this year amid previous rounds of negotiation with pilots and crew.

It said fuel was up from $50 a barrel last year to $80, an increase that was likely to cost the company €430m over the course of the year.

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In a statement accompanying its results, the airline also issued a warning about the prospect of a “no-deal” Brexit, in which the UK leaves the European Union without an agreement on matters such as trade, increasingly likely.



“We remain concerned by the danger of a hard (“no-deal”) Brexit in March 2019,” it said.

“While there is a view that a 21-month transition agreement from March 2019 to December 2020 will be implemented (and extended), recent events in the UK political sphere have added to this uncertainty and we believe that the risk of a hard Brexit is being underestimated.”