Ryanair Profits Down 20% Amidst Crew Strikes
Ryanair (NASDAQ: RYAAY) reported that its first quarter profit was down 20 percent from the same period last year due to higher fuel costs, rising wages and strikes by some of its crew members. The company posted a profit of 319 million euros ($374.4 million) for the three months to June 30. That was higher than the average estimate of 305 million euros from a poll of analysts.
Revenue rose 9 percent to 2.1 billion euros. Growth in revenues for optional extras led the charge, growing 25 percent in the quarter Unit cost rose by 10 percent while passenger numbers grew 7 percent. The company forecast profit for the year to be between 1.25 billion euros and 1.35 billion euros, down from the 1.45 billion-euro profit recorded in the last fiscal year.
Ryanair, Europe’s largest low-cost carrier, is currently facing its worst-ever week for strikes. Cabin crews in Spain, Portugal, Italy, and Belgium have announced their intentions to take action, joining pilots and air traffic controllers in protesting for better wages and working conditions. The recent actions have forced the airline to cancel more than 2,500 flights, affecting 450,000 passengers.
The airline’s CEO, Michael O’Leary, has lashed out at the protesters, calling the demands of the striking unions “unreasonable” and warning the pilots and cabin crew they could lose their jobs if the series of strikes continue. In a statement, he said, “While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model.”
The statement continued on to say, “If these unnecessary strikes continue to damage customer confidence and forward prices/yields in certain country markets then we will have to review our winter schedule, which may lead to fleet reductions at disrupted bases and job losses.” According to reports, he is planning to file a legal complaint with the European Commission over the air traffic controller strikes.