Ryanair shares are lower Monday, as the Irish budget airline has cut its full-year profit guidance, as ongoing strike action and higher oil prices take their toll. The Irish-based airline said that two co-ordinated five-country strikes, had hit confidence in the company, resulting in fewer bookings and lower fares.
By 1050 BST, Ryanair shares were 8.92% lower at €11.95. The stock has been broadly lower in recent weeks.
Ryanair profit warning
Ryanair said Monday, that it had reduced its full-year profit guidance to a range of €1.10 billion to €1.20 billion, from a previous outlook of €1.25 billion to €1.35 billion. It has also reduced its fares guidance from approximately +1% to an outlook of -3% versus the previous financial year.
“While we successfully managed 5 strikes by 25% of our Irish pilots this summer, 2 recent coordinated strikes by cabin crew and pilots across 5 EU countries has affected passenger numbers (through flight cancellations), close in bookings and yields (as we re-accommodate disrupted passengers), and forward air fares into Q3,” said Ryanair CEO, Michael O’Leary.
“While we regret these disruptions, we have on both strike days operated over 90% of our schedule. However, customer confidence, forward bookings and Q3 fares has been affected, most notably over the Oct school mid-terms and Christmas, in those 5 countries where unnecessary strikes have been repeated,” he added.
O’Leary added that Ryanair was disappointed at the ongoing staff strike action, particularly as the airline had written to the unions involved, offering to meet many of their terms, including moving to local country contracts.
Oil price weighs
In addition to the uncertainty created by continued industrial action, higher oil prices are also having an impact on potential profitability.
Ryanair said following the rise of the oil price to around $82 per barrel, it is now anticipating total fuel costs for the full 2018/19 financial year will exceed the 2017/18 full year by €460 million. The budget airline had previously expected it would be €430 million higher.