COVER STORY
ightglobal.com 14-20 February 2017 | Flight International | 9Boeing ‘in talks’ to
end 747 production
Air Transport PI
rish budget carrier Ryanair says
it expects its business in the UK
to slow as the country heads to-
wards a formal withdrawal from
the EU, while disclosing a
marked fall in its third-quarter
profit for 2016.
The carrier says there is still
“significant uncertainty” regard-
ing the eventual relationship be-
tween the UK and the EU, par-
ticularly given the signals that the
UK is preparing for a complete
separation, rather than an agree-
ment retaining certain market-ac-
cess rights.
Such uncertainty will “contin-
ue to represent a challenge for
our business” over 2017-2018,
Ryanair says in a third-quarter fi-
nancial statement, adding that it
expects the UK’s currency to “re-
main volatile for some time”.
“We may see a slowdown in
economic growth in both the UK
and Europe as we move closer to
[the UK’s exit],” it adds. “While
there may be opportunities to ex-
pand at certain UK airports... we
expect to grow at a slower pace
than previously planned in
the UK.”
Ryanair says it will continue to
shift capacity to other markets in
Europe if opportunities for UK
expansion diminish.
“We hope that the UK remainsa member of Europe’s ‘open
skies’ system,” it says. “Until the
final outcome is known, howev-
er, we will continue to adapt to
changing circumstances in the
best interest of our customers,
people and shareholders.”
On 6 February the carrier re-
vealed an 8% fall in its third-
quarter after-tax profit for 2016, to
€95 million ($101 million).Ryanair says the decline in the
three months to 31 December fol-
lowed a 17% fall in average fares.
Revenues increased by only 1%,
to just over €1.3 billion.
Chief executive Michael
O’Leary says the decline in yields
has been “exacerbated” by the
drop in the value of sterling fol-
lowing last June’s Brexit referen-
dum result. However, as fares
fell, the airline’s load factor rose
to 95% over the quarter.
The carrier is also expecting a
sharp decline in fourth-quarter
yields, partly because the 2017
Easter holiday falls outside of the
financial year, but is maintaining
a full-year forecast of a €1.3-1.
billion profit.Meanwhile, Ryanair finance
chief Neil Sorahan says he ex-
pects Lufthansa’s wet-lease deal
with Air Berlin to be investigated
by the EU on competition
grounds, despite its recent ap-
proval by German regulators.
Speaking to FlightGlobal, Sora-
han says that while the “so-called
ACMI transaction” has secured
German approval, “other parties”
would want to look at the agree-
ment in more detail. He describes
the arrangement under which Air
Berlin will lease 38 aircraft to
Lufthansa as a “good old-fash-
ioned merger [that] falls under
competition rules both in the EU
and in Germany”.
“I appreciate that they have
called it something else, but
when you look at it on its own it
absolutely is a merger. It would be
unusual for somebody to go out
and wet-lease as many aircraft at
one time as is happening in this
instance,” he says. “We will see
hopefully a more detailed eye
thrown over the submission
when it gets to the EU level.”
Lufthansa Group chief execu-
tive Carsten Spohr has defended
the wet-lease deal, saying the car-
rier will continue to compete
with Air Berlin. ■
Additional reporting by Oliver
Clark in LondonWhile yields fell in the third quarter, overall load factor rose to 95%Geoff Robinson Photography/REX/ShutterstockRESULTS DAVID KAMINSKI-MORROW LONDONRyanair feels impact of Brexit instability
Carrier expects uncertainty over UK’s relationship with EU to slow growth, and is prepared to shift capacity elsewhere“We expect to grow
at a slower pace than
previously planned
in the UK”
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