Airlines

Published on February 23rd, 2015 | by Jim Lee

0

Ryanair’s ‘Always Getting Better’ programme leads to yet higher predictions for full year profit

On 4th December, as it released its November traffic figures, Ryanair was able to give revised full year traffic guidance to just over 90 million customers up from its original guidance of 89 million issued with its first half year (H1) results published on 3rd November. It also raised its full year profit after-tax forecast from its previous range of €750 million to €770 million, to a new range of €810 million to €830 million. Ryanair’s share price shot up on the announcement closing up 8.4%, or 73 cent, at €9.45. This is a gain of 60% over the past year and values the company at €13 billion. Ryanair cautioned that the final full year profit will be still heavily reliant on close in bookings and yields in fourth quarter (January – March 15) over which it presently has very little visibility. Its ‘Always Getting Better’ customer programme has it said “delivered a stronger than expected performance in the first month of Ryanair’s significantly expanded winter schedule”. Despite increasing November seat capacity by 13% (over November 2013) and opening a large number of new city pair routes designed to appeal to business traffic, Ryanair’s November load factor rose by 7% points from 81% in 2013 to 88% in 2014. Ryanair also noted that it had materially exceeded its first month load factor targets across a significant number of city pair markets where it is offering business type frequencies in direct competition to longer established, higher fare airlines as the following examples it provided illustrate:

  • From Dublin on three new routes to Brussels (three daily), Glasgow (3) and Cologne (1) in competition with Aer Lingus, the first month load factor was 80%. (Presumably Ryanair is comparing the Cologne service with Aer Lingus’ Dusseldorf route).
  • From Warsaw (Modlin) to Gdansk (2 daily) and Wroclaw (2) in competition with LOT, the first month load factor was 82%.
  • From London Stansted to Glasgow (3 daily), Edinburgh (3), Lisbon (3), Cologne (2) and Athens in competition with easyJet, the first month load factor was 88%.
  • From Lisbon to London (3 daily), Hamburg (1), Rome (1) and Milan (1) in competition with TAP and others, the first month load factor was 90%.

November traffic update

 

The November traffic statistics shows that traffic grew by a staggering 5.2 million to 6.35 million customers (up 22%), although this must be seen in the context of the 8.4 million customers (up 5%), recorded in October. Load factor increased 7% points from 81% to 88% and rolling annual traffic rose to 85.4 million customers (up 5%).

Fleet update

 

RyanairOn 28th November Ryanair’s commitment to purchase 100 new Boeing 737-MAX 200 aircraft (plus a further 100 options) originally announced in September was approved by 99.93% of shareholders who voted at an Extraordinary General Meeting (EGM) convened for this purpose at the airline’s headquarters in Swords, County Dublin. When finalised (and if all options are exercised) this deal will be valued at over $22 billion (€17.91 billion) at current list prices. In spite of the eye watering sum of money involved the business of the meeting lasted less than a minute as most of the shareholders had already exercised their votes by proxy leaving just three external shareholders who had turned up, and who were outnumbered by the board, no real say in the matter. Such was the speed of the EGM that it was deemed that there was no need even to read the resolution regarding the order. Unusually, Michael O’Leary declined an offer to say a few words but did issue a statement saying that Ryanair was “proud and honoured to become the lead operator” of the aircraft, “which would expand the Ryanair fleet to approximately 520 aircraft by 2024.” The statement added the order would “create another 10,000 new jobs for pilots, cabin crew and engineers in Europe, while allowing us to grow traffic from 82 million passengers last year to over 150 million by 2024.” The 100 aircraft on firm order are scheduled to arrive between August 2019 and November 2023 while the delivery dates for the option aircraft are between January 2020 and November 2023. These aircraft are additional to the 175 Boeing B738-8AS(W)s ordered in June 2013 plus a further five ordered in April 2014. Five aircraft have already been delivered and a further 10 are due by 31st March 2015, 36 are due in 2016, 50 in 2017, 50 in 2018 and 29 are due in 2019. 75 aircraft are replacements to existing fleet.

Since our last report which noted the delivery of EI-FEI on 7th November, there have been no further additions to the Ryanair fleet. The active fleet therefore remains at 302 aircraft from the original 353.

Michael O’Leary is quoted as saying that Ryanair will likely lease in seven additional aircraft to cover next year’s summer high season. This summer four Boeing 737-400, two Air Explore (OM-AEX and OM-CEX) and two Air Contractors EI-JRD/ZS-JRD and EI-JRE/ZS-JRE) and three Boeing 737-800s from flydubai (EI-FEB/A6-FDD, EI-FEC/ A6-FDE and EI-FED/ A6-FDF) were leased in along with an A320-200, EI-EXK from the now defunct Italian carrier Livingston Air.

Route updates

 

On 5th December Ryanair announced it would open its 72nd base and its 4th Portuguese base in the Azores from April 2015 with one based aircraft and three new routes to London Stansted, Lisbon and Porto. The single based aircraft is expected to deliver 350,000 customers per annum with 20 weekly flights with morning and evening schedules. Ponta Delgada to London Stansted will operate weekly while there will be a twice daily service to Lisbon and a daily service to Porto. Ryanair said it welcomed the Government’s decision to open the Azorean market to competition following the removal by Instituto Nacional de Aviação Civil (INAC) of the PSO restrictions which will benefit Island residents, tourists and consumers. It is also in discussions with the Government of the Azores about possible services to Terceira and additional international flights to the Islands.

Ryanair’s bid for Cyprus Airways

 

A final decision on bids for Cyprus Airways could be delayed to allow investigations into whether procedures involving the seeking out of strategic investors for the airline were above board. The investigations are said to examine the extent of the involvement of the law firm founded by President Nicos Anastasiades. The auditor-general’s office has already commenced its examination of the procedures that got underway in July. In particular it is said to be looking into whether the president had any direct or indirect involvement in the process, with respect to the connections between Nicos Chr. Anastasiades & Partners, the law firm founded by Anastasiades, and Ryanair. It must be stressed that no evidence to support such assumptions has been published. Meanwhile, the board of Cyprus Airways is in chaos following the leaking of its new emergency plan. Board members have been replaced by the Cypriot government and Chairman Makis Constantinides has resigned and was replaced by his deputy, Marinos Kallis. Neither Ryanair’s nor Aegean Airlines’ business plans were accepted by the Government who produced its own survival plan to keep the airline afloat until the acquisition process is completed. Separately, Ryanair’s chief marketing officer, Kenny Jacobs has said Ryanair’s focus is to expand within Germany, Scandinavia and Cyprus “whether it’s with Cyprus Airways or not.”

Ryanair’s legal battles

In an announcement on 25th November Ryanair welcomed the ruling of the EU General Court which found that the European Commission did not properly investigate whether an exemption from the Irish travel tax for transfer and transit passengers constituted State aid to Aer Lingus and Aer Arann. Ryanair had argued that the exemption for transfer and transit passengers from the air travel tax – which was set at €10 for flights departing Irish airports and landing more than 300km from Dublin Airport, and €2 for flights departing Irish airports and landing less than 300km from Dublin Airport – constituted State aid to Aer Lingus and Aer Arann. However, the European Commission refused to formally investigate this complaint in July 2011. The EU General Court annulled the European Commission’s July 2011 decision and found that the Commission did not properly investigate whether this exemption constituted State aid to Aer Lingus and Aer Arann.

Ryanair also welcomed an Irish Supreme Court ruling that legal cases taken by Ryanair against screenscraper websites must be heard in Ireland. Ryanair has been engaged in various cases across Europe but screenscrapers such as eDreams, Billigfluege, On the Beach and Ticketpoint had sought to overturn previous High Court decisions regarding jurisdiction. However, this argument was dismissed by the Supreme Court.

Ryanair’s seven-year battle with regulators in Britain and the European Commission over its shareholding in Aer Lingus reached another key milestone with a two day hearing in the UK Court of Appeal during November. The court is expected to rule before 19th December (the end of the current law term), on whether Ryanair should cut its stake in Aer Lingus to 5% from the 29.8% held at present. However given the complexity of the issues and the fact that the court can take five or six months to make a ruling it could well be the New Year before its verdict is delivered. Last year, the UK Competition and Markets Authority (CMA) ordered Ryanair to dispose of most of its Aer Lingus stake, which the regulator found had led, or could be expected to lead, to a substantial lessening of competition between the two on routes between Britain and Ireland. The UK Competition Appeal Tribunal quashed an earlier Ryanair challenge to the original ruling in March. The airline has pledged to appeal the decision all the way to Europe if necessary.

New partnership with Booking.com

 

On 24th November Ryanair announced a new partnership with Booking.com, the world leader in online hotel and accommodation booking which will now allow Ryanair customers to book the widest range of accommodation at the same time as their flights at the best prices.

Electronic flight bags launched on all Ryanair flights

 

Electronic flight bags launched on all Ryanair flightsOn 27th November Ryanair launched Electronic Flight Bags (EFB) for all pilots, across its entire fleet of 300 Boeing 737-800 aircraft, which will see Ryanair pilots using iPads in place of traditional flight manuals. Ryanair pilots now have full electronic use of Boeing’s Onboard Performance Tool (OPT), which includes take-off performance calculations, as well as instant access to the most up to date electronic flight manuals. These two applications are the first in a suite of products that Ryanair is preparing to roll out over the coming months, including electronic charts and load sheets, subject to testing and approval from the Irish Aviation Authority. The removal of paper from the flight deck, eliminating 15kgs of manuals from each cockpit, or more than 10 million pages of paper documentation will create fuel savings on over 550,000 flights annually.

Ryanair and Shannon

 

Ryanair 13m Passenger 01On 1st December the company celebrated carrying 13 million customers at Shannon Airport since April 2000, in a year of rapid traffic growth at Shannon and other Irish airports, thanks largely to the decision of Finance Minister, Michael Noonan, to scrap APD (air passenger duty) on 1st April 2014. Ryanair launched 10 new routes from Shannon as a direct result of the travel tax being scraped and expects to deliver an additional 300,000 customers at Shannon this year, a rise of 77% to 750,000 making a huge contribution to local economy in the process. Michael O’Leary travelled to Shannon to mark the milestone moment and presented the 13th millionth passenger, Piotr Rachuta, who was travelling back to Poland on the Shannon-Wroclaw flight with his wife Marta and 4 year old daughter Amelia following a holiday with relatives in Tralee, Co. Kerry, with a Ryanair family flight. Reflecting Ryanair’s new ‘friendly face’ he got a big cheer as he announced his own version of ‘one for everybody in the audience’ giving away a free flight to all passengers queuing on for the 10:05 Wroclaw flight. The airport also weighed in with the early Christmas presents by gifting the winners Shannon Duty Free shopping vouchers and executive Lounge passes as well as a Shannon Duty Free hamper for all on the packed flight.

On the 29th November, Ryanair announced that its popular Santa flights will return to Shannon. Almost 2,000 people will have the chance to join one of the airline’s seasonal Santa flights which were a hugely popular sell out last year attracting 15,000 applications within three hours of becoming available. “Last year was intended as a one-off but we were inundated with requests from parents wanting us to do it again this year” said Shannon Group CEO Neil Pakey. Ryanair’s Maria Macken said: “We are delighted to team up with Shannon Airport again this year and give children in the Shannon region the chance to meet Santa in the sky”. A total of 10 Santa flights will operate out of Shannon on 13th and 14th December at a nominal fee of €10 per booking with the proceeds going to two local children’s charities, St Gabriel’s School in Dooradoyle and Clare Crusaders. The flights were opened for bookings from 14:00 on 28th November on the Shannon Airport website and were confined to a maximum of six, with two adults only. Again they were an immediate sell out.

Not everybody is happy with Ryanair’s new relationship with Shannon. Sean Sherlock, Minister of State at the Department of Foreign Affairs and Trade with special responsibility for overseas development aid, trade promotion and North-South co-operation has called for a review of the “confidential” landing fees deal between Ryanair and Shannon Airport as part of an overhaul of the State’s draft aviation policy. The Minister who represents Cork East has concerns over falling traffic in Cork and the transfer of a number of routes to Shannon. “Any national aviation policy must have a level playing field so that Cork and Shannon can compete for new business but from an equal footing,” he said adding that he had raised his concerns directly with Transport Minister Paschal Donohoe.

…..and finally

 

The yellow interior is to be replaced on the Ryanair fleet.Kenny Jacobs recently revealed his thoughts on Ryanairs future in an interview with Independent.ie Travel. This included his views on transatlantic flights which he said “is still very much in the business plan”, Ryanair’s package holidays which “could be a reality within a 12-18 month time-frame” and a change to the yellow interiors which he said was the top of his list when he joined Ryanair. In relation to Wi-Fi on Ryanair he said they “want to do it” and “are going to do it” probably within the next 18-24 months. “But we want to find the right technology” he added and envisages that it will be a free service.

Tags:


About the Author

Jim has had a life-long interest in military matters and aviation. Initially, he fused both of these interests together with a passion for military aviation, initially as a photographer. He has travelled extensively over the years and has been the guest of many European air forces, plus the air forces of the United States, Russia and others throughout the world. His first introduction to journalism coincided with an interest in the civil aviation industry was when he initially wrote for and later edited, ‘Aviation Ireland’, the club magazine of the Aviation Society of Ireland. Jim was a contributor to Flying in Ireland since its inception over 10 years ago and is now a key contributor to this site. He has also contributed items for a number of other aviation magazines and has produced a number of detailed contributions to Government policy documents, most recently the Irish Government’s White Paper on Defence. He is also deeply involved in the local community and voluntary sector and has worked both in local government and central government.



Comments are closed.

Back to Top ↑