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Ryanair H1: expansion may cease
Ryanair’s profits (for the first half of the year) have recovered from last year’s low level, but are still down 5% on two years previously (pre-exceptional post tax). The company is also reconsidering its planned expansion of its fleet.
The recovery is the result of the fall in oil prices, which lead to a 27% fall in costs, helped a little by a 5% fall in non-fuel prices.The outlook is a little uncertain with further cuts in fair prices planned, despite the current robustness of oil prices. Ryanairs biggest problem is the uncertainty of recovery, especially the weak UK economy (and Ireland is at least equally bad).
Ryanair expects to make losses in the next half of the year, but it has not changed its guidance on full year profits, so the losses are likely to be small.
The biggest news in today’s announcement is that the company is considering cancelling orders for 200 aircraft. This may be a negotiating tactic to get a better deal from Boeing, but we could see a pause in growth. It is not all bad news as this would mean money being returned to shareholders.
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