Ryanair cautious on fuel costs as full-year profit rises by 10%

Michael O'Leary has 'sincerely apologised' to customers affected by cancellations

Image CEO Michael O'Leary 'sincerely apologised' to customers affected by cancellations

The news came amid signs that the airline faces possible industrial action from pilot unions impatient with the pace of recognition talks.

'If that continues to build, it's something we may have to look at again'.

Europe's biggest discount airline is also grappling with higher expenses after a rostering foul up left it short of pilots, forcing it to sweeten contracts and recognize trade unions.

O'Leary said air fares were likely to be flat over the coming year, as it takes about 12 months for changes in fuel prices to feed through to fares.

An Irish low-priced airline Ryanair said its net profit rose by about 10% in 2017-2018 despite the cancellation of thousands of flights.

Ryanair Holdings PLC (LON:RYA) shares slipped on Monday as it reported a 10% increase in 2018 profits but cut its estimates for the year ahead, saying it is on the "pessimistic side of cautious".

When adjusted for volume growth, rising oil prices are anticipated to add over €400m to the airline's fuel bill.

The dispute with pilots is still creating financial headwinds for the airline because it was forced to recognize and negotiate with staff unions for the first time in the company's history. Ryanair is 90% hedged for 2018-19 at around $58 per barrel, compared with the current spot price of nearly $80. "Ancillaries now deliver 28% of revenue and we are well on track to achieve our 5-year goal of 30%", it says.

Earlier this year it surprised aviation observers by buying a chunk of Austria-based airline LaudaMotion - and the Irish company is now sniffing around for more acquisitions. Among the "key issues" for the next 12 months, he said, was the fate of low-priced, long-haul carrier Norwegian Air Shuttle.

Ryanair Chief Executive Michael O'Leary speaks during a news conference on the signing of the agreement between Ukraine's Boryspil and Lviv airports and Irish carrier Ryanair at Boryspil International Airport outside Kiev, Ukraine March 23, 2018.

Ryanair also recently announced it is acquiring 24.9% of Austrian carrier LaudaMotion, with plans to increase this to 75% subject to regulatory approval.

The airline believes passenger numbers will grow 7 per cent to 139 million, and that it will fill 95 per cent of the seats on its craft.

He added: "Forward bookings are strong but pricing remains soft".

The group forecast profit after tax of between 1.25 billion and 1.35 billion euros over the next 12 months, lower than analyst forecasts.

"Ryanair may have been able to weather last year's rostering debacle with a record annual profit".

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