Monday 16 September 2019

O'Leary predicts more casualties of higher fuel prices and low fares

Prediction: Ryanair CEO Michael O’Leary said the industry is moving ‘inexorably’ towards consolidation
Prediction: Ryanair CEO Michael O’Leary said the industry is moving ‘inexorably’ towards consolidation
John Mulligan

John Mulligan

MICHAEL O'Leary was characteristically blunt with analysts yesterday.

"The pricing environment is s**t," he said, commenting on how downward pressure on air fares is proving a challenge for Ryanair and other carriers.

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Its fares (the average was €37 in the last financial year) are now the same as they were back in 2010, but the carrier is still far more profitable. He said the low air-fare environment is good for Ryanair.

"We're the lowest-cost operator," said Mr O'Leary. "We have no intention of stepping back our capacity growth because we're adding capacity that is fundamentally lower cost [than rivals']."

The airline chief has again predicted the demise of other airlines in Europe as jet fuel prices remain high and fares low.

He singled out Norwegian and Thomas Cook as being stressed, but claimed a clutch of other carriers in Europe are also under pressure, from Portugal's Tap to Poland's Lot.

"We're back to this famous [Warren] Buffet maxim: 'It's only when the tide goes out that you see who's swimming with trunks and who's swimming naked'," he said.

"The industry is moving inexorably towards a consolidated outcome, as it has in North America in last four or five years," added Mr O'Leary.

"Air fares in Europe are materially lower than they are in North America, with a higher cost base. That will, over the medium term, work itself out of the system."

Irish Independent

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