Ryanair reveals lower profits and warns more airlines will fail

Struggling Ryanair on Monday warned of turbulent times ahead for the aviation industry, forecasting that a number of airlines will collapse as it capped off a miserable summer by posting lower profits.

The Dublin-based carrier was hurt in the six months to September 30 by repeated ATC staff strikes which led to flight cancellations. That, coupled with higher fuel costs, contributed to profits falling 7% to €1.2 billion.

The budget airline’s chief executive Michael O’Leary warned that margins are under pressure because of fuel reaching $85 per barrel, rising interest rates and a stronger US dollar.

O’Leary pointed to a number of recent collapses, including Danish airline Primera and Cyprus firm Cobalt. He warned: “It is inevitable that more of the weaker, unhedged European airlines will fold this winter."

O'Leary added: “We cannot rule out further capacity cuts or base closures in Ryanair if oil prices rise or air fares fall further.”

He also said the risk of a hard Brexit is rising. In the event of no deal, Ryanair could be forced to restrict the voting rights of all non-EU shareholders.

The outspoken’s airline chief’s gloomy comments come after a difficult year for Ryanair.

It had to grapple with the fallout from a rota fiasco in 2017 that led to pilot shortages and some 20,000 flights being cancelled.

That resulted in Ryanair sweetening contracts and recognising some trade unions.

However, talks with a number of unions are still ongoing, and O’Leary said: “Repeated air traffic control (ATC) strikes and staff shortages means that 2018 will be the worst year on record for European ATC disruptions.”

The firm still managed to increase revenues 8% to €4.8 billion, which was ahead of what analysts had expected.

Earlier this month, Ryanair issued a profit warning. It today reiterated its full-year profit forecast of between €1.1 billion and €1.2 billion.

The shares edged up 0.52c higher to €11.96.

Ryanair’s update today comes days after the airline came under fire for its handling of an incident in which a male passenger allegedly racially abused an elderly black woman aboard one of its Stansted-bound flights last week.

Ryanair said: “We have reported this to the police in Essex and as this is now a police matter, we cannot comment further.”