Strikes, higher fuel prices and rising labour costs have sent profits into a tailspin at budget airline Ryanair during the three months to the end of June.
Post-tax profit plunged by 20% to €319 million, from €397 million during the same period last year.
Shares fell by 0.64 cents, or 4.16%, to €14.86 after the company reported earnings per share down 18% from 32.66 cents last time to 26.62 cents.
Air traffic control problems
Ryanair said: “Fuel prices have risen substantially. While we are 90% hedged at $58 a barrel our unhedged balance will see our full-year fuel bill increase by at least €430 million.”
The airline was bedevilled during the period by poor industrial relations both inside and outside the company. Air traffic controllers in France were on strike for nine of the 13 weekends during April, May and June “leading to thousands of cancelled flights”. Ryanair cancelled more than 2,500 flights involving about 450,000 passengers during the quarter “with a loss of higher-yielding weekend traffic”.
Ryanair and other airlines have begun legal proceedings against the French government to keep the skies open and have called on the European Commission to take over responsibility for the upper air space so that overflights are unaffected by national air traffic control strikes.
Elsewhere, shortages of air traffic control staff, mainly in the UK, Germany and Greece, had an impact on Ryanair’s schedules.
Warning of job losses
Within the company, a series of initiatives “to make Ryanair more attractive to pilots and cabin crew” have included recognition of trade unions and a 20% pay rise over the next five years “which makes our pilots significantly better paid than competitor (Norwegian and Jet2) Boeing 737 pilots”.
Ryanair said: “We have minimised the impact of these strikes on customers by cancelling a small proportion of our flight schedule, well in advance of the day of travel, to allow our customers to switch flights or apply for full refunds”.
Further strikes are expected 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”.
Ryanair warned a continuation of strikes may lead to job losses, adding: “We cannot allow our customers’ flights to be un-necessarily disrupted by a tiny minority of pilots.”