Ryanair has reduced its profit forecast for the current fiscal year by 12% (March 31, 2018 to March 31, 2019) due to the increase in fuel prices and losses as a result of the wave of strikes by pilots and cabin crew that the airline is suffering throughout Europe. The company has warned that it will cut its capacity for the winter season with the closure of two bases in the Netherlands and Germany. The stock has responded with a 12.8% drop on the Dublin Stock Exchange.
Thus, the Irish airline plans to close the year with profits of between 1,100 and 1,200 million euros, compared to the initial range of between 1,250 and 1,350 million, according to a company statement. The company earned 1,450 million euros in the fiscal year 2018. All these forecasts do not include the effect of the purchase of Laudamotion, which will mean losses of 150 million euros.
Ryanair explained that both the traffic and the rates of the second and third fiscal quarter will be somewhat lower than expected largely as a result of the stoppages, which has forced to lower the rates for the October and Christmas reservations "as it has been affected the client's confidence in fear of new strikes. " The fuel bill will be approximately 460 million euros more than last year, 30 million more than originally planned.
The airline does not rule out more stoppages in the last three months of the year, which would mean a further reduction of its financial forecasts "and may require an additional capacity cut" in the winter season.
The company continues to attribute these "unnecessary strikes" to unions "incited by competition employees", despite the fact that "Ryanair agreed to satisfy union demands and local contracts and laws," according to CEO Michael O'Leary . The airline has suffered three major strikes since last July: a stoppage of Irish pilots and two coordinated strikes by crews and pilots in Germany, the Netherlands, Belgium, Spain and Portugal.
Due to this increase in costs, Ryanair will cut its capacity by 1% for the winter season of 2018, from November 5. For this, it will close the base of four aircraft in Eindhoven, although most of the routes to or from the Dutch city will continue with aircraft based abroad. The base of two planes in Bremen will also be closed, which will be carried out with non-German aircraft. And the base of five Niederrhein aircraft will be reduced to three aircraft. The company says that it will consult with cabin crew and pilots to minimize job losses, offering vacancies and paid permits.