From Yahoo Finance · · 1m 40s
Ryanair Slashes Winter Flights to Cut Fuel Costs
Ryanair cuts winter flights to avoid €70m-100m fuel losses as oil spikes.
In brief
Ryanair cuts winter flights to avoid €70m-100m fuel losses as oil spikes. Ryanair reduced winter flights by 2 million passengers to save €70m-100m from oil price spikes, but quarterly profits fell 34% due to unhedged fuel costs. Originally reported by Yahoo Finance.
Ryanair cuts winter flights
Ryanair Holdings plc reduced its full-year passenger target from 216 million to 214 million to shrink exposure to unhedged jet fuel during its unprofitable winter schedule.
Oil prices near $140 per barrel
Jet fuel was trading near $140 a barrel when Ryanair made the decision to slash winter flights, expecting to trim seasonal losses by €70 million to €100 million.
Ryanair's fuel hedge advantage
Ryanair locked in about 80% of its fuel needs for the year at roughly $67 a barrel, far below the current $140 spot price, giving it a major cost advantage over rivals.
Strong balance sheet
Ryanair has no debt after repaying its final bond and holds roughly €2.8 billion in cash, allowing it to maintain capacity and invest in its fleet.
New aircraft order
Ryanair ordered 300 Boeing 737 MAX-10 jets, which offer 20% more seats and 20% lower fuel consumption per aircraft than its current fleet.
Quarterly profit drop
First-quarter profit after tax fell 34% year over year to €538 million as the cost of unhedged fuel roughly doubled and average fares declined 6%.
Lower traffic target
Ryanair cut its full-year passenger target by 2 million and expects November-to-March traffic to remain flat compared to the previous year.
Fuel price risks
Ryanair still carries major exposure to further oil-price increases, leaving earnings and capacity decisions vulnerable to another surge in crude prices.
The key point
Ryanair reduced winter flights by 2 million passengers to save €70m-100m from oil price spikes, but quarterly profits fell 34% due to unhedged fuel costs.
