Ryanair posts record annual profit; stays cautious about year ahead

Dublin

RYANAIR posted a record annual profit on Monday as it brushed off a rostering mess-up that forced it to cancel flights and sparked a dispute with pilots, but warned that profits would fall back in the coming year due to higher costs and no fare growth.

Ryanair cancelled 20,000 flights in September as an emergency measure to free up enough standby pilots to ensure the smooth operation of its fleet of 400 planes for the remainder of the year.

The cancellations sparked a wave of bad publicity and forced Ryanair to cut its growth plans for the first time in years. It has insisted that this is a temporary measure and its long-term growth target remains intact.

Europe's largest low-cost carrier booked a record 1.45 billion euros (S$2.28 billion) profit after tax in its financial year to March 31, up 10 per cent year-on-year and slightly ahead of an average forecast of 1.44 billion euros in a company poll of analysts.

However, it said it expected to make a profit after tax of between 1.25 billion and 1.35 billion euros for the coming financial year, lower than the 1.37 billion euros expected on average by the analysts' forecast.

While Ryanair expects to grow traffic by 7 per cent to 139 million passengers, up on the 138 million last forecast, unit costs are expected to rise by 9 per cent due to higher staff and oil prices with revenue from ancillary products unlikely to grow fast enough to fully offset this and broadly flat fares.

"Our outlook for FY19 is on the pessimistic side of cautious," chief executive Michael O'Leary said in a statement.

"Forward bookings are strong but pricing remains soft. While still too early to accurately forecast close-in summer bookings or H2 fares, we are cautiously guiding broadly flat average fares for FY19," Mr O'Leary said.

The pessimistic tone was in contrast to rival EasyJet, Europe's second-biggest low-cost airline, which said last week that it expects profits to rise more than 30 per cent this year as it benefits from strong travel demand and the collapse of some smaller rivals.

Ryanair shares closed on Friday at 15.50 euros, down 22 per cent from an all-time high of 19.80 euros in August before the first cancellations were announced, but up 9 per cent from a low of 14.2 euros in mid-December.

The Irish carrier averted the threat of widespread Christmas strikes by unilaterally recognising unions in December for the first time in its 32-year history, but it has struggled to formalise relations in some countries.

It has warned that it may face some disruption to flights during the summer months. REUTERS