Ryanair is cutting the number of flights it offers from London Stansted and shifting its focus towards growth at airports outside the UK following the surprise Brexit vote in June.
The Dublin-based airline said it was rethinking its operations against a backdrop of heightened political and economic uncertainty triggered by the UK’s decision to quit the EU.
Stansted is Ryanair’s biggest airport base, with 40 out of a total fleet of 350 aircraft located there. Neil Sorahan, the chief financial officer, said airports in Italy, Spain and Germany would all be targets for growth as it eyes greater expansion outside the UK.
Michael O’Leary, Ryanair’s chief executive, said: “We will pivot our growth away from UK airports and focus more on growing at our EU airports over the next two years. This winter we will cut capacity and frequency on many London Stansted routes, although no routes will close.”
He said air fares were likely to fall until at least the end of 2017 because of the expected economic slowdown in the UK and EU following the result. The budget airline expects fares to fall by 8% over the first half of its financial year, and at least 10-12% in the second half.
O’Leary was an active remain campaigner in the run-up to the referendum, and announcing first-quarter results on Monday he described the vote to leave as “both a surprise and a disappointment”.
“Until some clarity emerges over the next two years about the UK’s long-term political and economic relationships with the EU, we will be unable to predict what effect it will have on our business and regulatory environment, but we have contingency plans in place for all eventualities,” he said.
He added that over the longer term, there might be some opportunity for Ryanair if its UK-based competitors were no longer permitted to operate routes from one EU destination to another or were forced to sell their majority ownership of EU-registered airlines.
He added: “If the UK is unable to negotiate access to the single market/open skies it may have implications for our three UK domestic routes and UK nationals on our share register, but these risks are not material and will be manageable.”
Pre-tax profit increased by 3% to €286.5m (£240m) in the first quarter ending 30 June, while revenue was up 2% at €1.69bn.
Average air fares fell 10% over the period to just under €40, and the number of passengers carried increased by 11% to 31.2 million.
O’Leary said the airline was maintaining its guidance that full-year profits would rise by about 12% to a range of €1.375bn to €1.425bn, but he warned that “post-Brexit there are significant risks to the downside during the remainder of the year”.
Ryanair now expects to carry about 117 million customers over the full year, up 10% compared with last year and 1 million more than it previously thought. Shares in the company rose 5.7%.
Sorahan said the airline was confident it could boost profits, despite the challenging backdrop for the industry, because it was effective at managing and reducing costs.
Ryanair was the latest airline to say the Brexit vote, the recent terrorist attacks and repeated air traffic control strikes – particularly in France – had caused disruption to business, resulting in lower fares and almost 1,000 flight cancellations.
However, Sorahan said the company was used to dealing with different challenges, including the Sars outbreak, the Icelandic volcano ash cloud, acts of terrorism, and the Brexit vote.
Last week, easyJet said it was facing one of the most difficult periods in memory, while German airline Lufthansa said bookings on long-haul routes to Europe had fallen sharply.
