Ryanair shares rise despite profits slide

Ryanair shares are higher Monday, despite the budget airline reporting a 7% decline in profits in the first half of its 2018-19 financial year.

Ryanair shares rise despite profits slide

Ryanair shares are trading higher Monday, after the budget airline reported a disappointing decline in its half year profits. The Irish airline said profits were hit by a variety of problems, including higher fuel costs, Union led staff strikes and Air Traffic Control disruption.

By 1200 BST, Ryanair shares were 4.85% higher at €12.00. After sliding sharply at the end of September, the stock has been broadly flat in recent weeks.

Ryanair H1 earnings

Earlier Monday, Ryanair reported its first half earnings, which showed profits in the six months to the end of September, sank 7% to €1.2 billion, compared with the same period a year earlier.

However, other measures reported in the release were positive:

  • Traffic rose 6%.
  • Ryanair’s planes were 96% full.
  • Ancillary revenues – income on items including luggage and seat reservations – surged 27% to €1.3 billion.

Ryanair also said its average fares during the period were some 3% lower than in a year earlier.

 “While ancillary revenues performed strongly, up 27%, these were offset by higher fuel, staff and EU261 costs,” said Ryanair CEO, Michael O’ Leary. “Our traffic, which was repeatedly impacted by the worst summer of ATC disruptions on record, grew 6% at an unchanged 96% load factor.”

Strike woes hurt

As expected, Ryanair’s profits were hit by numerous strikes during the summer. Not only were there more Union-led strikes to contend with, as they decried the Irish airlines’ negotiations over local-contracts, the ATC strikes, which affected all airlines, were also detrimental.

Higher fuel costs, again an industry-wide problem, also hurt.

However, after around 10 months of a variety of meetings, negotiations and strikes, it appears the budget flight firm is close to agreeing new contracts with the majority of its pilot and cabin crew staff across Europe.

Indeed, Ryanair said tis FY 2019 guidance remains unchanged at €1 - €1.2 billion profit.

“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,” Ryanair said.

Top Equities Brokers

0 Brokers added for comparison:
Clear all