Friday 23 August 2019

Ryanair stock in €1bn boost as cancellations fail to dent growth

Airline boss Michael O’Leary said the haemorrhaging of staff to Norwegian is now reversing. Photo: Bloomberg
Airline boss Michael O’Leary said the haemorrhaging of staff to Norwegian is now reversing. Photo: Bloomberg
Donal O'Donovan

Donal O'Donovan

Ryanair shares soared yesterday, closing up almost 7pc as the market lapped up half year results that show profits and growth largely undented by mass flight cancellations announced in September.

The swing boosted the airline's valuation by more than €1bn after CEO Michael O'Leary insisted Ryanair will be able to hire enough pilots to expand by 50pc in the next six years to operate a 600-strong fleet.

The cancellation of 20,000 flights following a well-publicised rostering crisis had cast doubts on its ability to maintain growth plans, which include bringing a record breaking order for Boeing planes into service.

Yesterday, Michael O'Leary told analysts on an investor call that those plans remain unchanged.

"We will take all of the new Boeing Max aircraft we have on order," he said.

The Irish Independent reported yesterday that four Ryanair employees in Ireland are being investigated on suspicion of inciting tax evasion in Germany, as part of a lengthy probe by German authorities into the tax and employment position of pilots working in the country for Ryanair under third-party contracts.

Ryanair itself is not suspected of any wrongdoing and the company has agreed to assist German authorities.

In relation to the use of contracted staff, Michael O'Leary yesterday rejected that the company benefited in tax terms from the use of contractors.

"There's this notion out there that somehow we're running some tax scam in Ireland by having people on Irish contract. We are big on Irish contracts because we're required to under Irish law," he said.

"Ireland does have a bit of reputation of being a sort of a tax haven from a corporate point of view, but from a personal point of view, it's a penal tax environment," he added.

"If you're flying an Irish aircraft, managed in the state of Ireland, you have to pay your taxes in Ireland. It's an Irish fiscal requirement," he said.

Earlier, Ryanair said it was on course to post record annual profits for 2017 and that bookings are better than last year.

"Is the underlying business model continuing to deliver? Yes it is," Mr O'Leary told investors. "Can it cope with the occasional f***-up?

"Yes it can and I think that is what we are demonstrating with these numbers."

He said the airline is paying pilots 20pc more than rivals and is hiring 40 to 50 pilots a week, including from Monarch and Air Berlin which both collapsed into insolvency this year.

Ryanair is beginning to see a reversal of a loss of pilots to Norwegian Air Shuttle, he said.

This newspaper reported in September that Norwegian had hired 150 Ryanair pilots this year.

Ryanair has offered pay hikes for pilots since the mass cancellations, in a bid to shore up staff retention and attract new hires, which will add around €100m per year in pay increases. The airline also cut in its passenger growth target to 129 million for the year to the end of March.

That is likely to help lift average ticket prices above previous forecasts in the coming months, Michael O'Leary said.

While Ryanair said pilots at 15 bases had so far accepted its new pay offer, staff at Stansted, the largest base, have rejected the deal.

Irish Independent

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