Ryanair adding seats, cutting back on British flights after Brexit vote. Ryanair made the statements during its quarterly earnings announcement on July 26. The airline announced net income increased 4.5% to €256 million during the quarter. The airline also reported an 11% gain in passenger traffic, which helped to offset a 10% ticket price decline. The airlines stock gained 5.5% to close at €11.56 yesterday on the Irish Stock Exchange. The stock has fallen around 23% so far this year.
The discount airline will attempt lure more passengers by lowering its ticket prices. European flight passenger loads have dropped substantially following a string of terrorist attacks in the region. Ryanair announced that it still plans to carry 10% more passengers than a year ago, which seems like a tall order. The Irish airline, based in Dublin, plans to drop ticket prices around 12% to lure customers away from other carriers.
Ryanair Brexit pains
The airline had campaigned heavily for Britain to remain in the European Union. Following the vote to leave the EU, the airline announced cutbacks on its London routes. The carrier will reduce service at the London Stansted Airport, beginning in the fourth quarter of this year. Stansted Airport is currently the biggest base Ryanair operates. The capacity will be shifted mainly to its eastern Europe operations, and includes around 50 new jet deliveries. European fares were already declining prior to the Brexit vote. The airline added flights in an attempt to increase market share. However, the expected increase in demand failed to materialize. The recent attacks in France and Germany are likely to drive ticket prices down even more.
EasyJet, the British discount rival of Ryanair, announced a profit warnings in recent weeks. EasyJet also failed to provide future earnings estimates. Its shares have lost a third of their value since the referendum vote. That airline may require a special licence to continue operating in Europe after the Brexit vote, as EasyJet is based in England. Ryanair generates about a quarter of its revenue in Britain, compared to about half for easyJet.
Image from www.ryanair.com