Following strong holiday period, Ryanair expects $1B profit

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Following a strong Christmas and New Year’s travel period, Ryanair now expects a higher profit margin and bigger passenger numbers in its Q4 FY2020 results. The Irish company ends its fiscal year on March 31, 2020, and issued its newest profit guidance update on January 10, 2020.

Ryanair‘s profit guidance was upped to be in the range of $1-1.1 billion (€950 million to 1 billion). Previously, when the company released its H1 FY2020 report, the issued profit guidance was in the range of $887 to $998 million (€800 to €900 million). Passenger traffic is also expected to be at 154 million travelers (previous guidance 153 million). Forward bookings for the period are also marginally up by 1%.

However, all is not well in the Ryanair group: Laudamotion, its Austrian subsidiary, is underperforming, states the public notice. According to the company, intense price competition between the Vienna-based low-cost carrier and Lufthansa Group’s airlines that were indicated as “subsidiaries in both Germany and Austria” will result in a net loss of $99.8 million (€90 million) instead of $88.7 million (€80 million) as previously expected. The Austrian company expects to carry 6.5 million passengers and while it would be an increase from its result of 3 million passengers last year, fares €15 below budget will put hinder the carrier’s ability to turn a profit. On the bright side, Laudamotion increased its load factors, indicates the statement.

In general, Austria and Germany have become the forefront of the struggle between full-service carriers and no-frills airlines in Europe. While Lufthansa’s (LHAB) (LHA) Chief Executive Officer Carsten Spohr called the low-cost business model “economically, ecologically and politically irresponsible,” Austrian Airlines’s own Alexis von Hoensbroech was also not shy to publicly take shots at Ryanair:

“Mr. O’Leary is wrong if he thinks, that he can overtake us here in Vienna,” the carrier’s CEO stated when the company announced its Q3 2019 financial results.

Ryanair will release its Q3 FY2020 results on February 3, 2020.


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