Business Irish

Tuesday 25 September 2018

Ryanair faces €200m revenue hit from lost sales after latest cancellations bite

Ryanair boss Michael O'Leary has apologised for the staffing crisis which has seen it forced to cancel thousands of flights Photo: Niall Carson/PA Wire
Ryanair boss Michael O'Leary has apologised for the staffing crisis which has seen it forced to cancel thousands of flights Photo: Niall Carson/PA Wire

Fearghal O'Connor

Embattled airline Ryanair will take a €200m hit to its potential revenue over the coming months because of the wave of cancellations it has been forced to implement.

The airline said the first set of 2,000 flight cancellations that came as a shock to passengers last month would cost it €25m, largely in compensation payments to many of the 300,000-plus customers impacted.

But a second batch of 18,000 flight cancellations announced last week is likely to see a much greater amount of revenue foregone. Close to 3.4 million seats have been withdrawn from sale between now and March.

Ryanair flights, on average, fly 97pc full, but allowing for lower 90pc winter-time loads, the 18,000 cancelled flights would have carried three million customers.

Ryanair's average fare is currently €41, meaning it has missed out on €125m in ticket sales alone, allowing for the rebooking of 400,000 passengers already booked.

But Ryanair makes an increasing amount of its revenue from ancillary sales, such as baggage fees and in-flight sales. Previous estimates suggest that the airline makes close to €14 per passenger in extra revenue over and above the ticket price paid.

That means that by cancelling more than three million seats, the bulk of which it had not yet sold, the airline is losing out on further ancillary revenue of at least €40m on top of €125m in ticket sales.

The airline said that as well as the initial €25m cost for the original cancellations, free vouchers issued to passengers would cost it a further €25m. Monthly growth will slow from 9pc to 4pc between November and next March, with traffic to March 2019 slowing from 142 million to 138 million, the airline said.

But aviation sources pointed out that Ryanair's own initial figures suggested average loss per passenger for the first 350,000 cancelled seats was €71.43, meaning revenue loss would top €230m if applied to the three million-plus seats now cancelled.

Sunday Indo Business

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