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Why Ryanair's future may be in danger



The low cost airline Ryanair announced Monday that its net profit fell by 29% in fiscal year 2018-2019 due to a fall in ticket prices, in a context of strong competition.

During the period between April 2018 and March 31, 2019, the main European group in number of transported passengers registered a net profit of 1.02 million euros. For the current 2019-2020, he says that he is "prudent" and expects a slight decrease in this profit, which could reach between 750 and 950 million euros.

The net profit of last year is at the end of the range announced by Ryanair, which provided a figure of between 1.0 and 1,100 million euros.

Ryanair's CEO, Michael O & Leary, has reduced its profits due to the strong competition in short-distance air transport in Europe, which is reducing the airline ticket prices for all airlines. actors The Irish group has found a fine of 6% lower than its average rates, 37 euros the ticket.

Mr. O & Leary also pointed out that Easter holidays did not fall in March this year, but in April also revenue related to this period favorable to holidays is not included in the accounts 2018 – 2019: they will be integrated with those of 2019-2020.

On the other hand, the increasingly low rates have supported the growth of Ryanair traffic, which reached a new record of 142 million annual passengers (+ 9%), including the results of its new Polish company Buzz and the recently acquired Austrian Lauda. and that officially joined the Ryanair group in December 2018.

The new company from the Ryanair group, Lauda, ​​regretted, nevertheless, the accounts of its parent company, which had to incorporate an exceptional loss of 139.5 million euros by absorbing the its new subsidiary. Ryanair explained that Lauda rented short-term airplanes at a high price and was not protected from fluctuations in oil prices.

Dear kerosene

For the group as a whole, the increase in gold prices has increased by 440 million euros Ryanair's kerosene account. The latter also predicts that kerosene prices will continue to increase during the current fiscal year, which should reinforce the difficulties of several airlines in a highly competitive sector.

The increase in the capacity of the airline industry and the continued decline in ticket prices should also accentuate this trend, as Ryanair expects "more bankruptcies of airlines next winter and, again, by 2020 ". The group counted on a dozen shortcomings in the European short-term sector last year.

For its part, Ryanair expects the growth of passenger traffic to continue, which could reach 153 million in the current year: the group went to 200 million passengers in 2024. It is expected that a new jump of 460 million euros in the kerosene weight bill on its net profit.

To reassure its shareholders, the group has announced a stock repurchase program of 700 million euros that will start this week.

Ryanair announced at the beginning of the year a reorganization to improve efficiency. The old Ryanair company is now made up of four companies: Ryanair DAC in Ireland, Ryanair UK in the UK, Lauda in Austria and Buzz in Poland.

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