Dow Jones – Ryanair sought to draw a line under weeks of flight cancellations and pilot strife as it reported an improvement in earnings and stuck to its full year-guidance.
Ryanair shocked passengers and investors in September and October by cancelling thousands of flights because of errors in scheduling staff. More than 700,000 passengers were affected.
The Irish carrier said profits for the six months to September rose 11% to €1.29bn. Sales rose to €2.52bn from €2.44bn a year earlier.
Despite the disruption related costs, and a promise to pilots to boost pay, Ryanair held to its full-year earnings target of €1.4bn to €1.45bn. The airline said that after completing the latest share buyback of €600m, it planned no more repurchases in the near term, to focus on its balance sheet.
“These strong results reinforce the robust nature of Ryanair’s low fare, pan-European growth model even during a period which suffered a material failure in our pilot-rostering function in early September,” said Michael O’Leary, the airline’s outspoken chief executive.
Yield development, a measure of ticket prices, is shaping up to be slightly better than expected in the second half of the airline’s financial year ending March 31. Though visibility is limited, Ryanair chief financial officer Neil Sorahan said it would fall by around 5% to 6% rather than 8%. Better ticket pricing and stronger-than-expected non-ticket revenue helped offset disruption costs, he said.
The pilot-staffing crisis forced Ryanair to trim expansion plans. Passenger numbers this financial year are now projected at 129 million, down from an earlier 131 million estimate; next year’s projection is now 138 million passengers, down from 142 million.
Ryanair says the Irish regulator asked it to change pilot holiday periods starting in 2018 to follow the calendar year rather than the airline’s March 31 financial year. That meant pilots who had flown during the busy summer period, when flights were around 97% sold, were owed their leave before year-end.
This backlog created the staffing bottleneck which Ryanair said it could only handle by massive flight cancellations that will last into next year.
The move also raised tensions with pilots after Ryanair at one point threatened to force some to alter vacation plans.
Ryanair has long had a testy relationship with some staff, in part because some contracts don’t guarantee flight time. US pilot groups have pledged financial and other backing to help Ryanair pilots organise a union. The British pilots´ union is in talks with Ryanair crew to assess whether they would support a strike to press for better employment terms.
On Tuesday, the airline said the promise of higher pay made in the wake of the disruption could add €45m to its crew costs this year and €100m in a full year, but would “not significantly alter” its cost edge over rivals. Pilots have yet to agree to the terms.
In the wake of the flight cancellations, Ryanair replaced its chief operating officer with Peter Bellew, who re-joined the carrier after a stint as chief executive of Malaysia Airlines. Working with pilots will be a priority of his, the airline said.
The airline said first-half costs excluding fuel were flat, though would have fallen if not for the compensation payments.