Ryanair warns pilots over strikes but says profit on track
* CEO says may move planes leading to job losses
* Says to meet annual profit target despite strikes
* Q1 Profit falls 20 pct y/y but ahead of consensus
* Hot weather, strikes push down average fares
(Updates with threat against staff;)
By Conor Humphries
DUBLIN, July 23 (Reuters) - Ryanair warned cabin
crew and pilots that some of them could lose their jobs if a
series of strikes continue but said it was on course to hit its
annual profit target despite the disruption.
The Irish low-cost carrier, Europe's largest, is facing its
worst-ever week for strikes, with over 300 of its daily 2,400
flights cancelled on Wednesday and Thursday due to action by
cabin crew in Spain, Portugal, Italy and Belgium.
But the airline on Monday beat analyst forecasts to post a
profit of 319 million euros ($374.4 million) for the three
months to June 30. While profit was down 20 percent from the
same period last year, it was ahead of the average estimate in a
company poll of analysts of 305 million euros.
It said growth in revenues for optional extras grew 25
percent in the quarter, helping to offset a fall of 4 percent in
average fares and higher fuel and staff costs.
The airline reaffirmed its forecast for profit for the year
to be between 1.25 billion euros and 1.35 billion euros, down
from a record 1.45 billion in the year to March 31.
"Strike action is bad for sentiment and creates short-term
risks to earnings, but should not impact Ryanair's long-term
competitive position, cost leadership, financial strength or
cash generation," Liberium analyst Gerald Khoo said in a note.
Ryanair's shares were down 6 percent to 14.60 euros at 0730
GMT, matching a 12-month intraday low hit in December when the
airline announced plans to recognise unions. That is down almost
25 percent from an all-time high of 19.38 euros last August.
The results come after EasyJet, Europe's
second-biggest low-cost airline, raised its profit guidance,
forecasting earnings could soar by as much as 45 percent this
year. Fast-growing budget airline Norwegian Air
Shuttle earlier in July also beat expectations with a
second-quarter net profit.
Ryanair, which flies in 37 countries and carried 130 million
passengers last year, averted widespread strikes before
Christmas by deciding to recognise trade unions for the first
time in its 32-year history. But it has since struggled to reach
agreement on terms with several of them.
It cited strikes as one of the reasons why average fares
would be lower than expected this summer, with high competition
and a heatwave in Northern Europe also weighing.
Average fares are expected to grow by 1 percent in the three
months to September 30, down from an earlier forecast of 5
percent growth, O'Leary said.
"While we continue to actively engage with pilot and cabin
crew unions across Europe, we expect further strikes over the
peak summer period as we are not prepared to concede to
unreasonable demands that will compromise either our low fares
or our highly efficient model," O'Leary said.
"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," he
In a pre-recorded presentation to investors, O'Leary said
market expectations for average fares in winter were "overdone"
and expected fares in the period to be flat compared to last
Ryanair also warned that Austrian holiday airline
Laudamotion, which it agreed to buy this year, would post annual
losses of 150 million euros ($176 million), up from an earlier
estimate of 100 million.
($1 = 0.8522 euros)
(Reporting by Conor Humphries
Editing by Gopakumar Warrier/Keith Weir)
First Published: 2018-07-23 07:00:01
Updated 2018-07-23 09:39:28
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