Ryanair Chief Executive Officer Michael O’Leary said the fallout from Britain’s decision to quit the European Union will weigh on the discount carrier's profit for as long as four years.
The process of the UK negotiating its way out of the bloc, which could take two to four years, is set to depress yields, a measure of ticket prices and profitability in the airline industry, the CEO said in a briefing with reporters in Brussels on Tuesday. O’Leary, a vocal opponent of Brexit, stuck to forecasts for profit in the current fiscal year of €1.38 billion despite the risks posed by the aftermath of the ballot.
“The outlook for the U.K. economy is poor,” O’Leary said. “This will mean slower GDP growth in the UK and European economies.”
Get a FREE Digital Subscription!Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
Europe’s biggest discount carrier has already put in place contingency plans including shifting growth away from the UK for the next two years, affecting its base at London Stansted Airport already this winter season. As part of the adjustments, the Dublin-based carrier won’t be assigning any of about 50 new aircraft due for delivery this year to UK routes.
Ryanair shares fell as much as 3.6 per cent, the biggest intraday decline since July 21, and were down 2.6 per cent at 12.06 euros as of 10:41 a.m. in Dublin. That extended this year’s decline to 20 per cent, valuing the company at 15.1 billion euros.
As part of the fallout from Brexit, the carrier may need to shift its shareholding structure, O’Leary said. Rules limit foreign ownership of EU airlines to below 50 per cent, but Ryanair would exceed that limit if the 20 percent held by UK investors is considered foreign following Brexit, the executive said, adding that about 45 per cent of the company is currently held by non-EU entities.
News by Bloomberg, edited by Hospitality Ireland