Ryanair hit by higher costs and delays to 737 MAX deliveries
Delays to deliveries of Boeing’s grounded planes dent profits
Ryanair reported a flat profit of €1.15 billion for the first half of its fiscal year, despite an 11 per cent increase in revenue.
Europe’s largest low-cost airline said that higher costs and delays to delivery of its 737 MAX aircraft had taken their toll.
The Irish company reported revenue of €5.39bn (£4.66bn, $6.02bn), an 11 per cent increase on the previous period. Its fuel bill alone had risen by 22 per cent to €1.59bn.
“Our outlook for the remainder of the year remains cautious,” the company said. “We are therefore narrowing our full year guidance to a new range of €800m to €900m PAT.”
Investors did not appear unduly concerned by the results. Shares in the company rose by around 7 per cent to €13.36 per share on the London Stock Exchange by midday, close to their highest since May.
Boeing’s 737 MAX jet, which can carry up to 200 passengers, has been grounded until further notice since two crashes that killed 346 people in October 2018 and March 2019.
Ryanair had been due to take delivery of 58 planes, but now expects only to receive 20 of what chief executive Michael O’Leary called a “game changer” aircraft by next spring.
“The challenge for us and for Boeing is to determine when this aircraft will go back into service. … We’re now not expecting the first of our MAXes until March or April next year, which means we’re getting very tight for summer 2020,” O’Leary said in a CNBC interview.
“Until the aircraft is back flying, we really can’t finalise what our costs have been as a result of these delays.”
The company said in a statement the delays had cut its growth rate to 157 million passengers in fiscal 2021, from a prior estimate of 162 million. As a result it would close a number of loss-making bases this winter, resulting in job losses for pilots and cabin crew.