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BCN-16
IRELAND-AVIATION-EARNINGS-LEAD
Ryanair to restructure, posts quarterly loss
LONDON, Feb 4, 2019 (BSS/AFP) – Ryanair unveiled Monday plans for an
overhaul to create four subsidiaries as the no-frills airline also revealed a
third-quarter loss of 20 million euros and said a no-deal Brexit “remains
worryingly high”.
Mirroring a set-up by British Airways and Iberia owner IAG, a statement
said it planned to have four distinct operations, each with its own chief
executive.
Michael O’Leary will head up the overall group, Ryanair said. Under him
will be Ryanair DAC overseeing the Irish operations and there will be also
Ryanair UK, Laudamotion for its Austrian business and Ryanair Sun, or Polish
unit.
“Having agreed this group strategy as the best way to grow Ryanair, Sun,
Lauda and other possible airline brands, Michael O’Leary has agreed a new
five-year contract as group CEO,” the statement said.
It added: “Over the next 12 months Ryanair Holdings Plc will move to a
group structure not dissimilar to that of IAG.
“A small senior management team will oversee the development of four
airline subsidiaries… (focusing) upon efficient capital allocation, cost
reductions, aircraft acquisitions and small scale M&A opportunities,” the
statement said
On the latest group earnings performance, O’Leary said that while the 20
million euros ($23 million) net loss was “disappointing”, the group takes
“comfort that this was entirely due to weaker than expected air fares”.
Last month, Ryanair cut its annual profit forecast for a second time,
blaming lower air fares caused by overcapacity in the European short-haul
sector.
On Monday meanwhile, it again spoke out on Brexit.
“The risk of a ‘no-deal’ Brexit remains worryingly high. While we hope
that common sense will prevail, and lead to either a delay in Brexit, or
agreement on the 21 month transition deal currently on the table, we have
taken all necessary steps to protect Ryanair’s business in a no-deal
environment,” the statement said.
Britain accounts for about one-quarter of revenues at Ryanair, causing the
airline to warn frequently about potential fallout from the UK’s rocky path
to exiting the European Union.
And while the airline sector as a whole took a knock last year from high
oil prices, a sharp reduction in fuel costs in recent months has removed such
pressures.
But the European short-haul sector remains weighed down by fierce
competition despite some consolidation, including Ryanair’s purchase of
Austrian carrier Laudamotion in 2018.
In addition, Ryanair’s earnings have been hit by pan-European strikes last
year that forced it to cancel flights, affecting thousands of passengers, and
offer improved pay deals to staff via landmark deals with unions.
BSS/AFP/HR/1452