Ryanair has shrugged off its pilot rostering crisis to record a rise in operating profits after reducing airfares to increase passenger numbers.
The Dublin-based airline has had to cancel 20,000 flights due to the shortage of pilots since September. But this has not stopped Ryanair from increasing operating profit by 6% to €126 million for the final three months of 2017.
Revenue rose by 4% during the quarter to €1.4 billion as passenger numbers went up by 6% to 30.4 million helped by a 4% drop in average fares to €32 per customer. Ryanair was buoyed by a 12% increase in ancillary revenue to €440.7 million for the quarter.
Chief executive Michael O’Leary said: “Following our pilot rostering failure in September, the painful decision to ground 25 aircraft ensured that punctuality of our operations quickly returned to our normal 90% average.”
Despite the increase in profit, O’Leary said the outlook for the first three months of 2018 was “cautious”, particularly as the airline continues negotiations with pilot unions around Europe.
“As we finalise union discussions along similar lines to that agreed in the UK, we expect some localised disruptions and adverse PR so investors should be prepared for same,” said O’Leary.
“In certain jurisdictions, unions representing competitor airlines will wish to test our commitment to our low cost, high pay/high productivity model to disrupt our operations. We are fully prepared to face down any such disruption if it means defending our cost base or our high productivity model.”
Ryanair still expects to make a post-tax profit of between €1.4 billion and €1.45 billion for the current financial year, which ends on March 31, 2018. But the airline admits this forecast “depends heavily on the absence of union disruptions, unforeseen security events and close-in Easter bookings”.
O’Leary added that airfares during summer 2018 “will remain under pressure” while Ryanair is also facing a €300 million rise in its fuel bill during the next financial year on top of an extra €100 million in staff costs as it increases pay for pilots.
“The lack of clarity on Brexit continues to overhang fares and pricing on routes to/from the UK,” said O’Leary.