Ryanair enters losses due to the fall in tariffs and is reorganized into four subsidiaries

Ryanair recorded losses of 19.6 million euros in its fiscal third quarter ending in December 2018, compared to gains of 106 million in the same period of the previous year. The first low-cost airline in Europe attributes this change in trend to a 6% decrease in fares during the winter season, within a sector punished by overcapacity.

Ryanair traffic increased by 8% to 33 million passengers during the first nine months of fiscal year. As a result, revenues increased by 9% to 1,530 million euros, driven by complementary revenues (reserve seats, luggage, priority boarding, etc.) that increased by 26% to 557 million.

In this way, it is denied as the company said that its new restrictive baggage policy would not mean a considerable increase in revenues but only lighten the boarding of passengers, as Ryanair justified when it launched it last November.

New structure
The Irish company also announced today that the CEO, Michael O’Leary, will leave his current functions of daily management of the company to be in charge of leading a new group structure very similar to IAG, owner of British Airways and Iberia, with four airline subsidiaries: parent Ryanair DAC, Laudamotion, Ryanair Sun and Ryanair United Kingdom. Each subsidiary will be led by its own directors and management teams that will apply an independent labor policy.

O’Leary will oversee cost efficiency, capital and aircraft allocation among airlines in their new role, as well as potential small-scale acquisitions, in a five-year contract with a reduced base salary and a lower bonus.

The company has started work to find a new CEO for Ryanair. In addition, the current president of the company, David Bonderman, will remain in office until the summer of 2020, when he will be relieved by Stan McCarthy, former CEO of the food company Kerry Group. 30% of the capital of Ryanair opposed the renewal of Bonderman in his post.

Brexit without agreement
The company warned that the risk of a Brexit without an agreement «remains worryingly high», although it notes that they have obtained three permits from the United Kingdom for the national routes of the United Kingdom, and established restrictions on voting rights and will share the sales of the Non-EU shareholders for a period to ensure that Ryanair remains an EU-owned and EU-controlled airline at all times.

The firm, which obtains most of its profits in the summer, expects to continue lowering the rates, which have fallen by 1% in the reserves from April to September, with a little less than one fifth of the reserves implemented. which points to a «flat to slightly low» trend for the year to March 2020, if the excess short-distance capacity in Europe continues.

«We have seen comments from some low-cost competitors with very few reserves implemented for the summer of 2019 that promise huge rate growth,» O’Leary said. «Frankly, with overcapacity in the European market, we do not see that, we do not share optimism and, in some cases, irrational optimism. They have been too optimistic before and in general we think we should be cautious. »

Ryanair shares, which fell more than 40% from a maximum of 19.39 euros 18 months ago before a wave of labor relations problems, fell by 3.3% today to 11.01 euros in the first operations.