DUBLIN (Reuters) – Ryanair posted its weakest annual profit in four years on Monday and said earnings could fall further next year as Europe’s largest low-cost carrier grapples with overcapacity, Brexit and delays in delivery of the Boeing 737 Max.
The airline posted a profit after tax for its financial year to March 31 – excluding startup losses at its Laudamotion unit – of 1.02 billion euros , down from 1.45 billion euros in the previous year.
It had forecast a profit of between 1 billion euros and 1.1 billion euros, and a company poll of over 10 analysts published ahead of the release had forecast 1.03 billion euros.
The Irish airline said delays in the delivery of Boeing 737 Max after its worldwide grounding in March had forced it to cut capacity by around 1 million passengers in the year to March 2020. It plans to fly 153 million passengers, up from 139 million this year.
Ryanair had been due to take delivery of five Max 737 aircraft between April and June and then 42 more before March 2020. Chief Financial Officer Neil Sorahan said he expected Ryanair to receive its first deliveries in October and that future deliveries would be “backed up a little.”
The airline plans to have a conversation with Boeing about modest compensation, he added.
Ryanair is one of Boeing’s biggest customers for the Max, which was grounded worldwide in March following a fatal Ethiopian Airlines crash that killed all 157 on board. It has ordered 135 737 MAX 200s and has options on 75 more.
Profit for the year to March 31, 2020 including Laudamotion could be between 750 million euros and 950 million euros, Ryanair said. Profit including Laudamotion’s exceptional losses this year was 880 million euros.
Ryanair said its fares for six months to the end of September were lower than last year and expected the trend to continue, although it said it had no visibility for the second half of its financial year.
Several rivals in recent weeks have warned of a worse trading environment – partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.
Ryanair’s shares closed on Friday at 10.81 euros, down over 40% from a peak of 19.39 euros 18 months ago, before the airline was hit by a wave of industrial unrest, weakness in European short-haul fares and the grounding of the Max.
Ryanair had cut its profit forecast for the year to March 2019 by around a fifth in two profit warnings between October and January, blaming strikes, higher oil prices and overcapacity in Europe.
(Reporting by Conor Humphries; Editing by Subhranshu Sahu)