RYANAIR have seen their profits plunge by 21% amid lower fares and the rising cost of fuel and staff.
Their profits fell to €243 million in the first quarter of the financial year and chief executive Michael O’Leary says Brexit is also partially to blame.
“The two weakest markets were Germany, where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices, and the UK, where Brexit concerns weigh negatively on consumer confidence and spending,” O’Leary said.
The low-cost airline insists that the drop in profits was connected to a 6% drop in fare prices over the quarter, but this has been partially offset by a 14% rise in price for extras like luggage space and food.
O’Leary also points to issues like new plane delays and insists he’s optimistic that profits will rise to anywhere between €750 million and €950 million after tax, towards the end of the year.
“We expect traffic to grow by 7% to over 152 million, slightly less than the 153 million previously guided due to the Boeing MAX delivery delays,” he said.
Some equity analysts have declared that a 21% fall in profits is actually better than what was expected given the increased fuel prices and public uncertainty surrounding Brexit.
With profits and fare prices falling, cost-cutting, therefore, seems inevitable.
Some of you may have noticed those ludicrously pointless ‘weigh-your-own-bag stations’ at Ryanair check-ins, where you pop your suitcase on the scales, print out your bag-tag and inevitably fork out an extra €20 because your case is 0.05kg overweight.
They don’t speed up the process for anyone, it just means they only have to have one miserable chap sitting at the check-in desk rather than eight of the buggers. And not that Ryanair cost-cutting is anything new, but with the latest profit reports, at least we’ve been given something of an explanation.