Tue, Feb 05, 2019 - Page 6 News List

Ryanair to restructure, posts Q3 loss

BREXIT WORRIES:A small management team is to oversee four subsidiaries focusing on capital allocation, cost-cutting, aircraft acquisitions and M&As, it said in a statement

AFP, LONDON

Ryanair Holdings PLC yesterday unveiled plans for an overhaul to create four subsidiaries as the no-frills airline also revealed a third-quarter loss of 20 million euros (US$22.88 million) and said a no-deal Brexit “remains worryingly high.”

Mirroring a set-up by British Airways PLC and Iberia owner IAG SA, a statement said it planned to have four distinct operations, each with its own chief executive.

Michael O’Leary will head up the overall group, Ryanair said. Under him will be Ryanair DAC overseeing the Irish operations and there will be also Ryanair UK, Laudamotion for its Austrian business and Ryanair Sun, or Polish unit.

“Having agreed this group strategy as the best way to grow Ryanair, Sun, Lauda and other possible airline brands, Michael O’Leary has agreed a new five-year contract as group CEO,” the statement said.

It added: “Over the next 12 months Ryanair Holdings PLC will move to a group structure not dissimilar to that of IAG. A small senior management team will oversee the development of four airline subsidiaries ... [focusing] upon efficient capital allocation, cost reductions, aircraft acquisitions and small scale M&A opportunities.”

On the latest group earnings performance, O’Leary said that while the 20 million euros net loss was “disappointing,” the group takes “comfort that this was entirely due to weaker than expected air fares.”

Last month, Ryanair cut its annual profit forecast for a second time, blaming lower air fares caused by overcapacity in the European short-haul sector.

Yesterday, it again spoke out on Brexit.

“The risk of a ‘no-deal’ Brexit remains worryingly high. While we hope that common sense will prevail, and lead to either a delay in Brexit, or agreement on the 21 month transition deal currently on the table, we have taken all necessary steps to protect Ryanair’s business in a no-deal environment,” the statement said.

Britain accounts for about one-quarter of revenues at Ryanair, causing the airline to warn frequently about potential fallout from the UK’s rocky path to exiting the EU.

And while the airline sector as a whole took a knock last year from high oil prices, a sharp reduction in fuel costs in recent months has removed such pressures.

However, the European short-haul sector remains weighed down by fierce competition despite some consolidation, including Ryanair’s purchase of Austrian carrier Laudamotion last year. In addition, Ryanair’s earnings have been hit by pan-European strikes last year that forced it to cancel flights, affecting thousands of passengers, and offer improved pay deals to staff via landmark deals with unions.

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