Ryanair reports soaring profits in 2018

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Chief executive Michael O'Leary said he was pleased with the results which were achieved despite overcapacity in Europe, a weaker fare environment, rising fuel prices, and the rota crisis last autumn which forced Ryanair to cancel around 20,000 flights.

During the 12-month period, Ryanair carried 130.3 million passengers at a 95% load factor.

The carrier said it has "limited first half and zero second half fare visibility". More guests are switching to our great value "plus" fares, reserved seating, priority boarding, and auto hire. Excluding-fuel, costs are projected to increase 6%.

By 1050 BST, Ryanair shares were 2.91% higher at €15.93.

Ryanair has since started work on union recognition for the first time in its history - agreeing deals with pilots' unions in the United Kingdom and Italy - and has agreed new five-year pay deals with pilots and cabin crew.

Ryanair-passenger-forecast-2018
Ryanair expects to see 200m passengers by FY24

The dispute with pilots is still creating financial headwinds for the airline because it was forced to recognize and negotiate with staff unions for the first time in the company's history.

Ryanair said it has reached agreements with its United Kingdom and Italian pilots, and made progress with cabin crew in Britain and Spain, while cautioning that there could be localized strikes as negotiations continue.

"I also think there will be other opportunities within the M&A space, not that we will lead in that space", O'Leary said. "And at group structure, again, model on the IAG structure would enable us to build some scale to participate in those kind of processes". "We expect this leadership to continue", he added.

"We expect the market for experienced pilots in Europe to remain tight for the next 12 months, and accordingly, this will continue to put upward pressure on staff costs for all European Union airlines", Ryanair said.

However, despite the positive year, the budget airline is less sanguine about its 2018-19 performance.

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Ryanair added 50 Boeing 737s in FY2018 to bring its fleet to 430 aircraft and is poised to take delivery of 210 new fuel-efficient Boeing single-aisle aircraft it refers to as "Gamechangers".

The carrier previous year delivery of 50 new B737 planes and increased its Boeing order to 135 firm MAX-200 Gamechangers, with a further 75 under option (210 in total).

It believes passenger numbers will grow 7pc cent to 139m and profits to fall between €1.25bn and €1.35bn as lower fares and higher fuel costs eat into margins.

Ryanair fell short of its 90% on-time performance target, with punctuality slipping by two points to 86%. Along with its investment in LaudaMotion, Ryanair has a unit called Ryanair Sun, a charter airline operating out of Poland. Among the "key issues" for the next 12 months, he said, was the fate of low-priced, long-haul carrier Norwegian Air Shuttle.

Ryanair also recently announced it is acquiring 24.9% of Austrian carrier LaudaMotion, with plans to increase this to 75% subject to regulatory approval. LaudaMotion has a valuable portfolio of slots at many congested airports in Germany, Vienna, and Palma de Mallorca.

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The figure is likely to fall back to a range of 1.25 billion euros to 1.35 billion euros in the current 12 months, including 100 million euros of higher crew costs, the carrier said in a forecast it said was "on the pessimistic side of cautious". He said that LaudaMotion will be "modestly profitable and self-sustaining" once those leases expire.

Ryanair, which is due to release financial results this morning, said that it doesn't comment on negotiations with its staff.

"This will lead to a modest increase in ex-fuel unit costs next year but will underpin our growth to nearly 600 aircraft and 200m guests per annum by FY24, " O'Leary said.

But O'Leary's remarks came as Ryanair deals with higher oil and labor costs. "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. Ancillary revenues will grow as penetration of customer services continues to rise.

Europe's biggest low-priced airline is able to be more flexible as its fleet reaches a size that's big enough to accommodate planes from two manufacturers without jeopardizing economies of scale, Chief Operations Officer Peter Bellew said in an interview in Dublin last week.

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