Category Archives: Ryanair

Air France-KLM, easyJet, IAG, Lufthansa Group and Ryanair call for a new EU Aviation Strategy

European Union flag

The CEOs of Europe’s five largest airline groups – Air France-KLM, easyJet, International Airlines Group (IAG), Lufthansa Group and Ryanair – met collectively for the first time today (June 17) and agreed to work together to lobby for the development of a new EU Aviation Strategy that will support growth and jobs across Europe, strengthen the sector and give Europe’s passengers lower fares and more choice.

Air France-KLM logo

The meeting took place (in Brussels) in response to the new EU Transport Commissioner Violeta Bulc’s consultation on a new EU Aviation Strategy. The five agreed a vision for this strategy that would match the revolution in aviation that the liberalization of Europe’s airline sector created a generation ago, through the creation of the internal aviation market.

easyJet (UK) 2015 logo

The five airlines identified four measures that would support the Commission‘s objectives of enhancing the competitiveness of the European air transport industry both at European and international level, supporting growth and jobs across Europe and which would help consumers through the provision of more flights and lower fares.
These measures are:

The development of an EU Aviation strategy with a plan for a simple efficient regulatory structure, which would strengthen the competitiveness of European airlines, ensure jobs and growth through innovation (e.g. Horizon 2020), protect consumer interests and promote more efficiency to reduce costs.

Lowering the cost of the EU’s airports by ensuring that monopoly airports are effectively regulated; ensuring that passengers receive the full benefit of the commercial revenues which they create at airports; and that security charges are efficient. This could be achieved by reforming the Airport Charges Directive.

Delivering reliable and efficient airspace by reducing the cost of ATC provision; ensuring that ATC strikes do not cause disruption to passengers across Europe; resetting the Single European Sky strategy by focusing on using new technology to make efficiency savings; and using SESAR funding to drive compliance with the Single Sky framework.
Stimulating more economic activity and jobs by creating the right regulatory environment, removing passenger taxes and unreasonable environmental taxes.

IAG logo

The five CEOs – Alexandre de Juniac, Carolyn McCall, Willie Walsh, Carsten Spohr and Michael O’Leary – outlined their vision:

“Europe’s airlines form the most competitive sector in aviation with a diverse mix of carriers offering competition and choice to consumers.This is the first time we have set aside our competitive battles to highlight the importance of a new European Aviation Strategy.

The liberalization of aviation in Europe in the 1990’s, creating a fully liberalized single market with a comprehensive common regulatory framework 18 years ago, strongly enhanced competition across Europe.As a result, consumers have benefited with substantially lower fares and more routes across Europe and to the rest of the world. At the same time, EU airlines have maintained leading safety standards. The range and quality of services have increased and airline costs have fallen by 1 – 2% per year for the last two decades.

Lufthansa Group logo

We believe that this decline should now be matched by a reduction in those costs which airlines do not control themselves. “As the new Transport Commissioner prepares a new Aviation Strategy for Europe she must drive more competition, encourage more efficiency and help reduce costs in other parts of our industry (such as monopoly airports and Air Traffic Control providers) and reduce the tax burden on passengers.”

Aviation is a proven driver of economic growth and jobs. The proposed measures will create many hundreds of thousands of jobs – particularly for young people, at a time of high youth unemployment in countries such as Italy or Spain – and increase Europe’s GDP. The group will write to the EU Transport Commissioner Violeta Bulc asking for these measures to be put in place.

Ryanair logo-3

Alongside the proposed policy positions the five CEO’s confirmed their support for several key principles and action items which should underpin EU aviation policy. The most important of these is the commitment to safety and ensuring that safety standards are developed based on a risk based scientific assessment.

The CEOs confirmed their support for the liberalization of the whole aviation value chain and for pro-competition policy and regulation within the EU. They also confirmed their opposition to the provision of State-aid, as a general principle, to airlines and airports. They agreed that EU and national regulation and policies should support the efficient delivery of services, and that this includes the need for efficient operations to minimise the environmental impact of aviation. The importance of balanced consumer rights was also underlined; EU and national policies need to ensure that consumer rights are respected.

The CEOs agreed to work together to encourage the Commission and EU member states to take up the proposed measures. The five airlines agreed that airline representation in Brussels today is not as effective as it could be – with six airline representative organisations – and agreed to explore possible forms of future representation.

The five airlines between them carried a total of 420 million passengers in 2014, accounting for half of the passenger journeys in Europe.

Ryanair full year profit jumps 66% to €867 million on renewed customer service, will lease in six aircraft

Ryanair logo-3

Ryanair (Dublin) announced a full year net profit of €867 million ($947.7 million) for the fiscal year ending on March 31.

The company issued this statement:

Ryanair’s CEO, Michael O’Leary, said:

“We are pleased to celebrate Ryanair’s 30th Birthday by reporting this 66% increase in net profit which demonstrates the enduring strength of Ryanair’s lowest fare/lowest cost model which has been transformed by the success of our “Always Getting Better” (AGB) customer experience program. AGB has attracted millions of new customers to Ryanair.

Highlights of the past year include:

– Traffic up 11% to 90.6 million as load factors rose from 83% to 88%

– Unit costs ex fuel were flat (including fuel they fell 5%)

– Net profits rose 66% as net margin jumped from 10% to 15%

– Earlier loading of schedules led to materially stronger forward bookings

– AGB Year 1 program delivered, Year 2 improvements rolled out

– Ryanair Labs is transforming our digital and mobile platforms

– Lead customer order for 200 x Boeing 737 Max 200 aircraft

– 2nd Eurobond issue (€850m @ 1.125% coupon) lowers our finance costs.

Business Development:

Over the past year we have relentlessly improved our lowest fare/lowest cost model. We have expanded into primary airports, added business schedules and extended long term low cost growth deals at major bases including London (STN) and Dublin where the Irish Government has rebooted tourism by abolishing the travel tax.

Our AGB program is transforming our customer experience, our service, and the way we listen and respond to our customers. We have won substantial traffic and share gains in all markets. We are now the No. 1 or No. 2 airline in most EU countries except France and Germany (where we are a rapidly growing No. 3). Since our Year 1 AGB program has been so successful we have launched our Year 2 program as part of our strategy to make Ryanair Europe’s most customer friendly, as well as its lowest fare, airline.

This combination of lowest fares and improving customer experience has led to higher load factors and double digit traffic growth. To facilitate this growth we have ordered 183 Boeing 737-800’s for delivery from 2014-2018, and 200 Boeing 737 Max 200’s from 2019-2023 (including 100 option aircraft). These aircraft will deliver at lower US$ rates and much lower Eurobond finance rates which (with 8 extra seats and 18% more efficient engines) will transform our aircraft costs and enable us to lower fares, which underpins our traffic and market share growth, while maintaining and/or growing margins.

Operations:

Our summer 2015 fleet of 320 aircraft is insufficient to handle the demand for Ryanair’s low fares. We will lease-in 6 aircraft in the peak period (7 in 2014) to help meet this surging demand. We expect over half of our growth to occur at primary airports such as Brussels, Lisbon, Rome, Athens, Copenhagen, Berlin, Cologne, Dublin and London (STN). Much of this growth is being stimulated by our Business Plus and Family Extra services which have been key features of our AGB program and our successful entry/growth at these primary airports.

We continue to deliver industry leading punctuality despite the occasional and repeated damage inflicted on our operations by unjustified ATC strikes and airspace closures or by adverse weather in different European regions during the winter schedule as follows:-

Last year we set out a strategy to drive stronger forward bookings, encourage customers to book earlier to avail of lower prices and deliver higher load factors. These higher load factors have helped to reduce unit costs and boosted ancillary sales. I am pleased that forward bookings, as we enter the S15 peak (June to Sept), are on average 4% ahead of last year, and we expect this will lead to a 2% points rise in load factors from 88% to 90% in FY16 especially as customers enjoy our AGB service improvements.

Revenue and Costs:

We celebrate the 30th anniversary of Ryanair first bringing low fares to Europe ( July 8, 1985) by growing our traffic 11% to 90.6 million customers. This generated revenue growth of 12% which was a pleasing result given we had no new aircraft deliveriesin summer 2014. Ancillary revenues grew at a slightly faster rate than traffic so total revenue rose 12% to over €5.6 billion.

Unit costs which benefited from lower unhedged fuel prices (10% of volume) fell by 5%. Excluding fuel our unit costs were flat, which was an impressive performance in a year where we made a substantial move to more expensive primary airports without compromising our 25 minute turnarounds. The fact that we maintained flat unit costs (ex-fuel) while many competitors saw their unit costs rise means that our cost leadership over competitors has widened during the last year. This bodes well for our growth, especially as we move into airports and routes where our competitors are charging markedly higher fares. This price advantage has helped Ryanair win substantial market share from competitor airlines in Dublin and London (STN), in particular.

Hedging:

Over the last year we have taken advantage of currency and fuel price weakness where possible, to establish a very favourable hedge position as follows:

– oil is 90% hedged for FY16 at $92 pbl

– oil is 36% hedged for FY17 at $69 pbl

– US$ OpEx is 90% hedged for FY16 & FY17 at $1.33 & $1.19 respectively

– US$ CapEx is 100% hedged for FY16, FY17 & FY18 at $1.37, $1.34 & $1.23 respectively

This favorable US$ hedging will deliver significant aircraft, maintenance and fuel savings over the next 2 years, even before we engage in further oil hedging during periods of price weakness.

Balance Sheet and Shareholder Returns:

Our rising profits are generating significant free cash flows, which has enabled us to deliver substantial returns to shareholders. In Feb. 2015 we paid our 3rd special dividend of €520 million (€0.37 per share) and then launched our 6th share buyback under which we hope to buy and retire €400 million of ordinary shares by the end of August. This will bring the cash returned to shareholders over the past 8 years to almost €3 billion.

Despite these pay-outs we still finished the year with €364 million in net cash and a balance sheet rated BBB+ by both S&P and Fitch Ratings, the highest rating of any airline worldwide. We expect our Eurobond program, (under which we have raised €1.7 billion unsecured at blended rates of 1.50% p.a.) will lower our financing costs, boost profitability and continue to strengthen our balance sheet.

Regulation:

Europe’s airline industry continues to be blighted by over-regulation which frequently places producer monopoly protection above the interest of consumers, or growth in tourism and jobs. Examples such as Europe’s discredited ETS system, the shambles of our single sky project and the failure to prohibit ATC strikes (either by “no strike” legislation, or binding arbitration) allows the ATC Unions to regularly and repeatedly close Europe’s skies.

The UK CMA’s 2013 divestment ruling under which this UK regulator orders one Irish airline to reduce its minority stake in another, solely on the basis of “secret” evidence that no other airline would bid for Aer Lingus while Ryanair held a minority 29.8% shareholding, has now been hopelessly disproven by IAG’s offer. We have written to the CMA calling on them to reverse this ruling but have been amazed that they (in their provisional decision) have claimed that the IAG bid for Aer Lingus (which they predicted would not happen) is not a “change of circumstances”. We believe the CMA will be totally discredited if they do not reverse this manifestly erroneous ruling.

In the meantime our approach to the IAG offer remains unchanged. The Board of Ryanair will consider any offer (should we receive one) from IAG on its merits, if or when it is received.

Ryanair strongly supports the development of additional runway capacity in the London market. We believe that the market should be free to develop 3 new runways, one each at Heathrow, Gatwick and Stansted which is the only long term solution to the capacity crisis in the South East, and which will encourage all 3 airports to deliver additional capacity quickly and cost efficiently.

Outlook:

Thanks to our lowest fares, our growth into primary airports and the remarkable impact of our Year 1 AGB program, we continue to experience strong demand and forward booking momentum. Average load factors in the first 4 months of 2015 grew by 10%. While this will slow to 1% or 2% over the peak summer months (due to high p/y comparables) forward bookings are on average 4% ahead of this time last year, as our earlier schedules, lower prices and AGB customer program, particularly at primary airports attracts millions of new customers to Ryanair.

While our traffic growth this year will be strong, (up 10%), it would be foolish not to expect some irrational pricing response from competitors who cannot compete with our lowest costs and fares. Ryanair will remain vigorously “load factor active/price passive”. Therefore, even with the benefit of lower oil, aircraft and financing costs we may suffer periods of fare/yield weakness especially during the H2 winter season. This is why our yield guidance remains cautious at broadly flat in H1 but down 4% to 8% in H2 for a forecast FY yield decline of 2%. If this decline proves accurate then we believe that lower unit costs in FY16 will still provide a 10% improvement in profits, which should (subject to H2 yields over which we have no visibility) rise to a range of €940 million to €970 million for the full year to March 2016.”

Hannah Maundrell Editor in chief of money.co.uk comments:

“Who ever thought we’d see Ryanair’s customer focus heralded as exemplary? Their impressive profits should act as a clear lesson to any company that thinks low prices excuse poor standards. Consumers want value for money, and they want to be treated fairly. Ryanair is proof that it’s never too late to turn things around.”

Copyright Photo below: Guillaume Besnard/AirlinersGallery.com. Ryanair will have to lease in six aircraft this summer to meet demand. Ryanair Boeing 737-8AS WL EI-EKJ (msn 38497) with “Comunitat Valenciana” sub-titles departs from Barcelona.

Ryanair aircraft slide show: AG Airline Slide Show

Ryanair to launch three new winter routes from Copenhagen

Ryanair (Dublin) has announced more growth at its Copenhagen base with three new routes from October 2015 to Alicante, Budapest and Malaga, as part of Ryanair’s 2015 winter schedule. These three new routes will add to Ryanair’s nine Copenhagen routes already operated to Brussels, Cologne/Bonn, Dublin, London (Stansted), Madrid, Milan (Malpensa), Rome, Stockholm and Warsaw.

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 737-8AS WL EI-DWW (msn 33629) arrives at Tenerife Sur.

Ryanair aircraft slide show: AG Airline Slide Show

AG Visit our new look

Ryanair backs off on trans-Atlantic flights

Ryanair (Dublin) has reportedly backed-off on media reports this week of a possible board approval and proposed low-fare trans-Atlantic flights in the near future. According to this BBC report, quoting a Ryanair statement, “Ryanair has not considered or approved any trans-Atlantic project and does not intend to do so”.

Read the full report: CLICK HERE

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 737-8AS EI-DYM (msn 36575) lands Tenerife Sur.

Ryanair aircraft slide show: AG Airline Slide Show

AG Building a better website

Ultra low-fare Ryanair is coming to America, will finally launch long-haul flights

Ryanair 30 Years

Ryanair (Dublin), after nearly 10 years of statements and small talk, the board of Ryanair (Dublin) have finally approved the launch of trans-Atlantic flights, which it claims could have fares as low £10, as part of an ambitious five-year growth strategy.

The Irish low-cost airline’s board has approved the plans to fly between up to 14 European cities and the same number of US cities. Destinations will include New York, Boston, Chicago and Miami from London Stansted, Dublin and Berlin. The services could start in four or five years’ time if the company can secure a deal to buy long-haul aircraft.

Below: Ryanair. Bookings on the USA site are coming from these five states where Ryanair is likely to serve.

Ryanair USA bookings

Ryanair said it was already in talks with manufacturers about purchasing long-haul aircraft but declined to provide further details.

It started in 2007, when Ryanair’s CEO, Michael O’Leary, stated in April of that year that Ryanair planned to launch a new long-haul airline around 2009. The new airline would be separate from Ryanair and operate under a different branding. It would offer both low cost with fares starting at €10 and a business class service which would be much more expensive, intended to rival airlines like Virgin Atlantic. The new airline would operate from Ryanair’s existing bases in Europe.

Since the Boeing 787 was sold out of production until at least 2012 at the time, and the Airbus A350 XWB would not enter service until 2014, this contributed to the delay of the airline’s launch. It was said that the name of the new airline would be RyanAtlantic and would sell tickets through the Ryanair website under an alliance agreement. In February 2010, O’Leary said the launch would be delayed until 2014, at the earliest, because of the shortage of suitable, cheap aircraft.

Well it’s finally happened now.

Ryanair logo

Ryanair said proposed trans-Atlantic fares would start from as little as £10 ($14, 13.2 euros) one-way, with regular prices close to 100 pounds per ticket.
Read more from The Guardian: CLICK HERE

Assistant Editor Oliver Wilcock reporting from Manchester.

Ryanair aircraft slide show: AG Airline Slide Show

Photo Below: Ryanair. The Irish color green comes from mixing blue and yellow (Ryanair’s colors), the original colors of Ireland.

Ryanair 737-800 cabin (LR)

Ryanair to further expand in Germany at Cologne/Bonn

Ryanair (Dublin) is doubling its Cologne/Bonn traffic as it launches seven new routes, including a four-times daily service to/from Berlin (Schoenefeld), as part of its Cologne Winter 2015/16 schedule (17 routes in total).

Besides Berlin, the new routes include Copenhagen (once daily), Las Palmas (Gran Canaria) (weekly), Milan (Malpensa) (twice-daily), Porto (four times weekly), Valencia (three times weekly) and Warsaw (daily).

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 737-8AS EI-DMO (msn 40283) with special Podkarpackie Travel markings prepares to land at Tenerife Sur.

Ryanair aircraft slide show: AG Airline Slide Show

AG Hang one of our framable prints