Ryanair Blames 21% Q1 Profits Fall on Higher Fuel and Staff Costs

Ryanair Holdings plc today reported a 21% fall in Q1 profits to €243m. A 6% decline in average fare was offset by strong ancillary revenues and 11% traffic growth to 42m passengers.

Costs rose 19% as its fuel bill increased 24% and Lauda costs were fully consolidated (but not in the prior year quarter).

Ryanair’s Michael O’Leary said:

“As previously guided, Q1 profits fell 21% to €243m due to lower fares, higher fuel and staff costs.”

The two weakest markets for Ryanair were Germany and the UK, where it said Brexit concerns are weighing negatively on consumer confidence and spending. However, revenues rose 11% to €2.3bn.

Ryanair has the lowest unit costs of any EU airline. As expected, its Q1 fuel bill increased 24% (up €150m) due to higher prices and volume growth. Unit costs ex. fuel rose by 4%, mainly due to the consolidation of Lauda (not in the prior year Q1 comp.), the hand back of expensive leases to Lufthansa, replacing them with 20 lower cost A320 operating leases, and a 21% increase in staff costs.  

The delivery of Ryanair’s first five Boeing 737-MAX aircraft has been delayed from Q1 to probably January at the earliest (subject to EASA approval). The airline now expects to receive only 30 MAX deliveries in time for S.20 (previously 58) which will cut Ryanair’s S.20 growth rate from 7% to 3% (162m to approx. 157m guests in FY21).

Mr O’Leary said the airline continues to guide “broadly flat” profit after tax for the year of around €750m to €950m.

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