Michael O’Leary warns on profit but eyes long-term growth

Ryanair chief executive Michael O'Leary has warned the airline may reduce its full-year profit guidance if a drop in ticket prices accelerates.

“We’re not yet revising the guidance,” he said to reporters on Wednesday in London. “But we’re very cautious on the full-year guidance. If winter fares fall by more than 10 or 12 per cent, we will have to review.”

The carrier said last week it is seeing fares in its core summer period fall by 9 per cent, sharper than the 6 to 8 per cent dip expected at the start of the budget airline’s fiscal year.

On Brexit, the chief executive, who backed the Remain campaign during the EU referendum, expects the United Kingdom to suffer “significant economic damage” as a result of its decision to quit the single bloc.

In July Ryanair said it would “pivot” growth away from UK airports and instead focus on hubs in the EU following the Brexit referendum result. The airline said its growth rate in the UK is expected to slow from about 15 per cent to 6 per cent next year.

New runways

However, with long-term growth in mind, Mr O’Leary is now calling on the UK government to approve three new runways in a bid to end Britain’s airport capacity conundrum for “the next 50 years”.

He urged prime minister Theresa May’s government to be “radical in its decision-making” and rubber-stamp new runways at Heathrow, Gatwick and Stansted airports. The proposal would mean ending the battle between Gatwick and Heathrow for a new runway.

"Ryanair calls on the new UK government to be radical in its decision-making on new runways for London instead of picking just one [Heathrow or Gatwick] and calls on prime minister Theresa May to approve three new runways – one each at Heathrow, Gatwick and Stansted, which will finally resolve the runway capacity issue for the next 50 years, while ensuring competition between airports delivers efficient facilities and prevents airlines and passengers being ripped off by gold-plated monopoly runways," he said.

Environmental impact

Last year, the UK government’s airports commission said a third runway at Heathrow is the best route to expanding airport capacity. Then prime minister

David Cameron

stalled on backing the recommendation, saying the government required more time to assess the environmental impact.

A decision is now expected before the end of the year. Mr O’Leary said that expanding only one airport would allow airlines to justify raising prices for customers, who might subsequently help foot the bill.

But competition between three airports would be a boon for travellers and benefit Ryanair long-term, he said. “We’ll have more capacity to grow, fares will fall and in a declining fare environment, we’ll win,” Mr O’Leary said.

Mr O’Leary made the announcement as he trumpeted new routes to Strasbourg and Faro and more flights to Sofia and Nuremberg from Stansted, Gatwick and Luton airports. – (PA)