Strikes and fuel costs hit discount airline


Ryanair could be headed for a rough landing this year.

Europe’s leading low cost airline slashed its profit forecast for the current fiscal year to between €1.1 billion ($1.27 billion) and €1.2 billion ($1.39 billion). That’s about €150 million ($174 million) less than the company had expected.

Ryanair (RYAAY) said that strikes and flight cancellations in September had resulted in lower traffic and higher costs. It warned that customer fears of further cancellations had led to reduced bookings, forcing the airline to cut fares in the third quarter.

Shares in Ryanair dropped 8% in London, leaving the stock down more than 20% so far this year.

A sharp rise in fuel costs has also heaped pressure on the airline and its outspoken CEO Michael O’Leary, who is confronting labor unions after staff strikes forced the cancellation of hundreds of flights in recent months.

Over the long run, labor disputes, shrinking profit margins and rising customer dissatisfaction could undermine the business model that made Ryanair the largest airline in Europe.

02 Ryanair demonstration 0928 RESTRICTED
Ryanair cabin crew members protest during a 24-hour strike in Madrid.

The tougher climate is now forcing it to scale back.

The company said Monday that it would close bases at Eindhoven in the Netherlands, and Bremen and Niederrhein in Germany on November 5. It said that affected pilots would likely be offered other positions and it would seek to minimize job losses among cabin crew.

CNNMoney (London) First published October 1, 2018: 4:23 AM ET

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