In broad terms, recent strikes at Ryanair could cost the airline up to €120 million. The carrier warned on Monday that profits for its full financial year, which ends on March 31st, 2019, would be between €1.1 billion and €1.2 billion instead of the €1.25 billion to €1.35 billion that it originally guided.
Higher fuel costs are likely to account for €30 million of the fall in profit, implying up to €120 million for the fallout from the strikes that have hit operations here and in Europe over the summer.
That includes the cost of reaccommodating or refunding customers as well as lower fares, resulting from the airline cutting prices to lure consumers who may be put off booking flights with Ryanair because they fear a strike will cancel the service.
The figures exclude the near €150 million once-off hit that Ryanair will take on the start-up losses at Laudamotion, the Austrian carrier in which it now holds a 75 per cent stake. That figure will be included in its 2019 results, indicating that profit could actually come in at about €1 billion once the exceptional charge is included.
Grounding of aircraft
Chief executive Michael O’Leary signalled there could be further profit warnings should Ryanair suffer more disruption and ground more aircraft over the winter. Some observers felt that this last line caused most nerves among investors, who sold off the airline heavily yesterday, sending its shares plunging by 12.5 per cent to €11.48 at the close in Dublin.
The fact that Ryanair made the statement less than two weeks after saying at its annual general meeting that it was leaving guidance unchanged, also fed into panic around the stock.
It is worth remembering that Ryanair generally takes a conservative view of its prospects and the actual results tend to come out at the upper end of its predictions, or even slightly ahead. Nevertheless, the past few months at the airline have been tough and investors clearly feel there is plenty of turbulence ahead.