June 19, 2019
Latest News
European Union

Ryanair: This year's profit to be dented by Boeing 737 MAX grounding

 A Ryanair Boeing 737-8AS lands at Riga International Airport, Latvia Mar. 15, 2019. EPA-EFE/FILE/TOMS KALNINS

A Ryanair Boeing 737-8AS lands at Riga International Airport, Latvia Mar. 15, 2019. EPA-EFE/FILE/TOMS KALNINS

By Robert Wall

London, May 20 (efe-epa).- Ryanair Holdings PLC, Europe's largest budget airline and the region's largest customer for Boeing’s 737 MAX jets, warned that profit for this year would be dented by the plane's global grounding, according to a Dow Jones Newswires report made available to EFE on Monday.

Ryanair said profit for the financial year that ended March 31 slumped to 885 million euros ($987 million), despite a 7 percent increase in sales to EUR7.7 billion.

Profitability was hit by a 6 percent slump in average fares and EUR139.5 million in costs associated with getting Austrian carrier Lauda running after Ryanair bought the airline in 2018.

Profit for the current year should be around last year's figure - at EUR750 million to EUR950 million - the Irish carrier said, depending on whether per-passenger sales rise 2 percent or 4 percent.

Ryanair hasn't previously given a forecast for this year, but it said the newly-issued guidance was muted by the crisis surrounding the Boeing plane and the continued weakness in ticket pricing. Analysts expected about EUR1 billion, according to a FactSet survey.

Ryanair faces higher-than-expected costs this year from the suspension of Boeing 737 MAX deliveries in March after the jet suffered two fatal crashes in Indonesia and Ethiopia in less than five months. The European discount carrier, which operates mostly older-model 737s, was due to receive its first MAX planes this spring, which would have provided more seats and greater fuel efficiency.

Ryanair, which has labeled the plane the "gamechanger," said it has pushed off deliveries until at least this winter, assuming regulators clear the plane to fly before that.

Ryanair Chief Financial Officer Neil Sorahan said the carrier now expects to receive its first MAX planes in October and start flying them in November if the plane, at that time, is cleared to fly again by regulators.

Ryanair still plans to take around 47 of the planes this financial year.

The carrier currently expects the United States Federal Aviation Administration to clear the MAX to resume flying around the end of June or in July, with Europe's regulator to follow in late July or possibly August, Sorahan said in an interview.

Ryanair said it will carry around 1 million fewer passengers this year because of the delayed MAX aircraft, which likely equates to about EUR37 million in lost sales. "We will be looking for compensation from Boeing, " Sorahan said, without giving a figure.

TUI AG and Norwegian Air Shuttle ASA, currently Europe's largest 737 MAX operators, have also said their profit was hit by the Boeing issue. Both carriers have signaled they expect Boeing to compensate them for the financial impact of the grounding.

Ryanair boosted Boeing, however, saying it had "utmost confidence in these aircraft," though it added the planes won't generate "meaningful" cost savings until the financial year ending in March 2021. The airline has ordered 135 of the planes with options for 75 more.

Sorahan said the airline was sure Boeing would fix the MAX and that Ryanair would consider, at the right price, also buying larger 737 MAX 10 models.

Purchasing rival Airbus A321s would also be an option, he added, depending on its costs.

Airlines in Europe have faced multiple headwinds, including rising fuel costs and overcapacity in some markets.

Several smaller carriers have gone bust and others - including Ryanair - have issued profit warnings in recent months. Carriers, including British Airways parent International Consolidated Airlines Group SA (IAG.LN) and British budget carrier easyJet, this month said they would slow growth.

Ryanair said it expected more airlines to go bust in Europe in winter, Dow Jones added in a report made available to EFE.

The budget airline's board also approved a EUR700 million share repurchase.

In the current year, costs are set to increase for the budget carrier. Fuel costs will be EUR460 million higher than in the prior year and nonfuel unit costs are rising 2 percent, which Ryanair blamed on the MAX delay and a stronger British currency.

Ryanair also said it was in advanced talks to sell 10 older 737s before March 2020, which would generate EUR170 million in income.

dj/hh

News history
Real Madrid reinforces its defense with new signing Mendy

Madrid, Jun 19 (efe-epa).- Real Madrid reinforced its defensive lineup with the inclusion of France left-back Ferland Mendy who was presented to fans at the...

What to know about Libra cryptocurrency

New York (USA), Jun 19 (efe-epa).-Facebook just disclosed the first details of its long-anticipated cryptocurrency, called Libra, according to a Dow Jones...

Former UEFA president Platini held over awarding 2022 FIFA World Cup to Qatar

Paris, Jun 18 (EFE).- Former UEFA president Michel Platini has been arrested on suspicion of corruption linked to a decision to award the 2022 World Cup to...

Real Madrid unveils new forward Rodrygo: I hope to make Madrid fans happy

Madrid, Jun 18 (efe-epa).- Real Madrid unveiled the latest component of its new squad for the upcoming season, Brazilian forward Rodrygo, at its Santiago...

US says Israel not invited to Bahrain Conference

Washington, Jun 18 (efe-epa).- The White House said it won't invite the Israeli government to the unveiling of the economic part of its Israeli-Palestinian...

North Korea lobs insults at US but shields Trump

Seoul, Jun 17 (efe-epa).- A year after North Korean leader Kim Jong Un's historic first meeting with President Donald Trump, his government is once again...

China biotech companies poach US talent

Hong Kong (China) Jun 17 (efe-epa).- China-based biotechnology startups looking to go global are poaching talent from the biggest American pharmaceutical...

Toyota in pole at Le Mans with Kobayashi driving, Alonso, 2nd, dreams of win

Le Mans (France), Jun 14 (efe-epa).- The driver Kamui Kobayashi secured pole position in his Toyota TS050 ahead of 24 hours of Le Mans, leaving second-place...

HSBC boosts role as Saudi banker

By Rory Jones in Dubai and Margot Patrick in London

Nintendo shifts some production from China

By Takashi Mochizuki

Pepsi executive picked to lead UK's Reckitt

By Saabira Chaudhuri

Boris Johnson says UK must leave EU on Oct. 31 as he launches leadership bid

London, Jun 12 (efe-epa).- Boris Johnson said Wednesday the United Kingdom must leave the European Union on Oct. 31 as he launched his bid to replace Prime...

European Union blocks merger between steelmaking giants Tata, Thyssenkrupp

Brussels, Jun 11 (efe-epa).- The European Commission has decided to block a planned merger between two steelmaking giants that would have formed a landmark...

What's next in payments

By Stella Yifan Xie

The financial-risk secrets that may be hidden in our faces

Shanghai (China), Jun 11 (efe-epa).- What does your face reveal about how big of a financial risk you are, asked Dow Jones in a report made available to EFE...

UK economy shrank in April as Brexit hit car production

London, Jun 10 (efe-epa).- The United Kingdom's economy shrank in April as car makers took the precaution of shuttering their factories in the weeks...

Theresa May officially steps down as UK PM

London, June 7 (efe-epa).- The United Kingdom's Prime Minister Theresa May has on Friday signed a letter of resignation as leader of the Conservative Party.

Credit markets: Treasurys jump on stock fall, rate talk

New York (USA), Jun 4 (efe-epa).- United States government bond prices climbed again, benefiting from a decline in technology stocks and a Federal Reserve...

EU calls for deeper association with Central Asia, says Tusk

Nur-Sultan, May 31 (efe-epa).- The European Union is aiming to strengthen its partnership with Central Asian countries, European Council President Donald...

Behind big deals: No one wants to be Blockbuster Video

By John D. Stoll

EU leaders clash over top bloc roles

By Valentina Pop

Several soccer players arrested in Spain for alleged match-fixing

Madrid, May 28 (efe-epa).- At least 11 soccer players from Spain's first and second divisions have been arrested or were under investigation on suspicion of...

Renault confirms it has received a merger proposal from Fiat Chrysler

Paris, May 27 (efe-epa).- The Renault car manufacturing group confirmed on Monday that it had received a proposal from Fiat Chrysler Automobiles to...

Fiat Chrysler unveils Renault merger proposal

By Sean McLain, Nick Kostov and Eric Sylvers

I agree Welcome to news4europe.eu. We use cookies to improve your online experience. Find out more.