Ryanair shares slide by 5% after weakest results in 4 years

Ryanair (RYA.L) shares plunged by more than 5% on Monday after the low-cost carrier announced its weakest annual profit in four years.

Pre-tax profit at the low-cost carrier fell almost 30 per cent to €948m (£830m) in the year to March 2019, with CEO Michael O’Leary warning that profits for the coming year would be “broadly flat.”

Not including the recently acquired Austrian airline Laudamotion, after-tax profits at Ryanair came in at the lower end of the airline’s January guidance, at €1.02bn (£893m).

The fall in profits came even as revenue jumped 6% to €7.6bn and traffic grew by 7%.

The Irish airline pointed to a 6% fall in fares and increased fuel costs, which rose by nearly 25%, as well as the impact of new pay deals with pilot and cabin crew unions, which saw staff costs soar by 28%.

O’Leary said that Ryanair’s fuel bill would jump by another 19% in the coming year.

Profits for the entire group, which includes Laudamotion, would be flat — coming in the €750m to €950m range — mainly because the airline expects fares to stay low.

But this guidance was “heavily dependent,” O’Leary said, on peak summer fares, prices in the second half of the year, the absence of security-related events, and “no negative Brexit developments.”

Fares in the summer would be lower, he said, but the airline may be able to offset the impact in winter.

O’Leary pointed to “attritional fare wars” within the low-cost segment of the market, saying that profits will suffer for a year or two. “I think that is what shareholders should expect,” he said.

The airline has also been impacted by delays with the Boeing 737 MAX aircraft, which were grounded in the wake of the March Ethiopian airlines crash.

Ryanair was expected to take delivery of five of the 135 aircraft it has ordered before June. Instead, it said that the aircraft will be flying by November.

"We continue to have utmost confidence in these aircraft which have 4% more seats, are 16% more fuel efficient and generate 40% lower noise emissions," the airline said.