Ryanair has today reported a 21% drop in profits in the first quarter. Europe’s largest low-cost airline blamed rising costs, as well as lower fares for the dip which it said was in line with a previously announced forecast.
A 24% rise in fuel costs, as well as higher staff costs, and the integration of its Lauda subsidiary brought profits down to €243 million up to the end June.
Ryanair also blamed the grounding of the Boeing 737MAX, although the airline did not specify how much of a hit it has taken because of this. The airline was expecting to take delivery of five highly densified MAX aircraft in the first quarter but no longer expects to receive these until January 2020 at the earliest.
The airline said it retains “great confidence” in the 737MAX and described the plane as a “game changer”.
Average fares have fallen 6% to just €36 as Ryanair fights for market share and turns the screws on legacy airlines such as Lufthansa. Those low fares helped Ryanair to increase passenger numbers by over 4.5 million.
However, heavily discounted fares were offset by a 27% jump in ancillary revenues. Ryanair said much of that had come from passengers buying priority boarding and preferred seats – the only way that passengers can now take carry-on luggage into the cabin with them.
Looking forward, Ryanair now estimates annual profits to reach between €750 to €950 million, which would be broadly flat on last years results. Costs are expected to rise further, mostly on the back of a higher fuel bill.