Ryanair’s boss has slammed the UK government for ‘underestimating’ the impact a no-deal Brexit will have on EU flights in a cautious trading update that sent shares in the budget airline down 3 per cent.
The company’s outlook for the year is ‘cautious’ boss Michael O’Leary said today, warning of further potential disruptions as a result of its pilots joining worker unions after last year’s strikes.
He used the update to accuse the UK government of underestimating the risk of ‘serious disruption’ a no-deal Brexit posed to UK and EU flights from April 2019 and said the firm has prepared contingency plans in case a deal was not struck by this September.
Brexit and the unions: A cautious update from Ryanair saw its share price stumble on Monday
Talk of union disruptions and Brexit uncertainty saw Ryanair shares slip in early morning trading by 3 per cent to €15.59.
‘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,’ O’Leary said.
‘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.’
Despite a 12 per cent rise in profits for the last three months of 2017 and a 6 per cent hike in passenger numbers, the firm said Brexit uncertainty meant the future was far from certain.
‘The lack of clarity on Brexit continues to overhang fares and pricing on routes to/from the UK. We would, even at this early date, urge extreme caution on investor & analyst assumptions for fares in the full year 2019,’ O’Leary added.
Budget boss: Michael O’Leary issued a stark warning to the government not to underestimate the risk a no-deal Brexit posed to UK/EU flights from April 2019
The continued unionisation of the pilots came after widespread disruption to flights last year on the back of demands over pay and conditions. Ryanair recently confirmed a 20 per cent pay increase for pilots, adding some €45 million to annual staff costs, and said it expected cabin crew will also seek to unionise.
The airline predicted an 8 per cent rise in passengers this year to 130 million and said it aims to grow traffic to 200 million passengers a year by March 2024.
It confirmed a raft of changes for customers.
Passengers can now check in 20kg luggage for lower fees, the firm said, and it will soon roll out a new cabin bag policy which allows priority customers two free carry-on bags. Other customers will be able to take two free carry-on bags but with the larger suitcase stored in the hold.
In a gloomy prediction for the next year ahead, O’Leary said he did not share the optimism its competitors had on the likelihood of fare increases this summer.
‘Very early indications are that summer 2018 fares will remain under pressure,’ O’Leary said.
‘Costs will rise next year as our fuel bill increases by over €300m and a further €100m is added to staff costs. The lack of clarity on Brexit continues to overhang fares and pricing on routes to/from the UK,’ he added.
‘We would, even at this early date, urge extreme caution on investor and analyst assumptions for fares in 2019.’
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