Ryanair has announced a €750m share buyback and sought to reassure shareholders that it’s equipped to remain Europe’s biggest low-cost airline despite being forced to increase wage bills.
Staff costs will increase by €45m euros this year as the airline lifts pay for its flight crews. Announcing its Q3 results, Ryanair insisted it would remain the most competitive airline in Europe, saying extra-dense Boeing 737 Max planes will help retain that advantage.
“After 30 years of successfully dealing directly with our people it became clear in December that a majority of pilots wanted to be represented by unions,” Chief Executive Officer Michael O’Leary said in a statement, adding that the decision to ground planes in order to cope with rostering issues that triggered the spat had been a “painful” one.
Ryanair was still able to boost net income 12% to €106m for the three months to end of December, though O’Leary said he’s cautious about the final period of the year, with a chance of localised disruption and “adverse PR” as remaining union deals are concluded. He said the carrier is “fully prepared to face down any such disruption” to defend its cost base.
Ryanair reiterated guidance for full-year net income between €1.4bn and €1.45b, assuming no further industrial action.
Outlook for fares
In contrast to rival EasyJet's positive outlook on fares last month, O’Leary was less optimistic. “While we have practically zero visibility on FY19 fares, and our budget is not yet finalised, we do not share the optimism of competitors and market commentators for summer 2018 fare rises.
“Our traffic will grow by 6% in FY19 to 138 million but very early indications are that summer 2018 fares will remain under pressure. Costs will rise next year as our fuel bill increases by over €300m and a further €100m is added to staff costs (as up to 20% pilot pay increases annualise). “
He added: “The lack of clarity on Brexit continues to overhang fares and pricing on routes to/from the UK. We would, even at this early date, urge extreme caution on investor & analyst assumptions for fares in FY19."
The share buyback will commence this month and should be completed by the end of October, the company said.
In mid-morning trading Ryanair shares had fallen, down 2.5% at 15.71.