Ryanair swings to $22.4M loss; announces shakeup

LONDON–Ryanair Holdings PLC RYA Monday laid out the first steps of its leadership succession as it swung to a third-quarter net loss after a slump in air fares forced it last month to cut its full-year earnings outlook for a second time this year.

Europe’s biggest budget carrier, after a tumultuous two-year period including labor strife that raised investor anger, said Chairman David Bonderman will leave the post next year. He will be replaced by Stan McCarthy, who joined the board in 2017 and becomes deputy chairman in April. Senior independent director Kyran McLaughlin also will exit in 2020.

Chief Executive Michael O’Leary’s contract has been extended for a further five years to at least July 2024, though changes in the company structure could open the door for an eventual replacement.

Mr. O’Leary will this year take on the new role as group chief executive, overseeing subsidiaries in charge of day-to-day running of the Irish budget airline, its small British unit, Austrian startup subsidiary Laudamotion and charter unit Ryanair Sun. Several of those businesses will get their own CEO, creating a potential succession lineup.

Ryanair on Monday also posted a net loss for the final three months of 2018 of EUR19.6 million ($22.4 million), down from a EUR105.6 million profit in the year-earlier period. Sales rose 9% to EUR1.53 billion on an 8% rise in passenger numbers.

The result, which excludes losses from Laudamotion, came in below the EUR7 million loss forecast by analysts in a FactSet survey. Including Laudamotion, Ryanair had a EUR46.5 million quarterly loss.

Mr. O’Leary called the quarterly loss "disappointing."

Ryanair last month cut its full-year profit outlook to EUR1 billion-EUR1.1 billion, or around 25% of the high-end of guidance issued in May. The forecast excludes around EUR140 million in losses associated with Laudamotion.

Mr. O’Leary also warned that Ryanair wasn’t as optimistic as others about summer bookings. The recent drop in fuel costs will keep more competitors flying, he said, keeping competition high and depressing air fares.

Ryanair, which last year agreed to let pilots and cabin crew unionize, has seen its labor costs rise. Oil-price volatility also has weighed on its financial performance.

Mr. O’Leary, in his new role as group CEO, which mirrors a corporate structure embraced by rival International Consolidated Airlines Group SA., would help the carrier focus on small-scale mergers and acquisition opportunities.

Ryanair also said it should get a cost boost from April when it starts introducing new Boeing 737 MAX 200 jetliners that can seat more passengers and are more fuel efficient.

The carrier, long one of the most outspoken in warning about the potential disruptions from Britain’s departure from the European Union, reiterated that in the case of a no-deal Brexit some non-EU shareholders would be stripped of their voting rights to meet EU airline ownership rules. Sales to non-EU shareholders could also be halted temporarily.

Write to Robert Wall at [email protected]

Source: Read Full Article