Ryanair profits to fall as fares weaken and costs rise

Ryanair has turned in a 10% rise in full-year net profit to Ђ1.45 billion (USD 1.7 billion), but is not expecting to reach the same level next year.

The airline is forecasting a profit of Ђ1.25-1.35 billion for 2018-19.

Ryanair has opted for an outlook on the "pessimistic side of cautious", because it expects higher oil prices which will add Ђ400 million to its fuel expenditure.

While passenger numbers will rise by 7% to 139 million, it says load factors will stay flat at 95%.

It adds that its non-fuel unit costs will rise by up to 6% as a result of higher salaries for cockpit and cabin crew. The airline is also investing ahead of plans to expand its fleet from 430 to 600 aircraft.

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"Forward bookings are strong but pricing remains soft," says the carrier. It says it is "cautiously" forecasting "broadly flat" average fares for 2018-19.

Ryanair says it does not expect ancillary revenues to offset the impact of higher costs and lower fares.

It outlook excludes the investment in Austrian operator Laudamotion because it has yet to secure regulatory clearance.

Ryanair achieved its full-year profit rise for 2017-18 despite a 3% fall in fares and the fallout from its high-profile pilot rostering problems.

The airline managed to increase passenger numbers by 9% to 130 million and cut unit costs by 1% – although non-fuel unit costs rose by 3%.

Ryanair says the European environment is still subject to overcapacity, and it states that it expects "above average" European Union capacity growth to continue over 2018-19.

"This may be partly ameliorated by the switch of some charter capacity back to previously security-challenged markets such as Turkey and Egypt," it states.

"We expect later in the year, some upward pressure on pricing as significantly higher oil prices impact margins, especially those EU airlines who continue to expand despite having no prospect of achieving profitability."