Ryanair says first-half profits hit partly by Brexit

Dublin: Ireland's budget airline Ryanair said Monday that first-half profits were hit by the slumping pound after Britain's June vote to leave the European Union.

Net profits, or earnings after taxation, stood at 1.2 billion euros ($1.3 billion) in the six months to the end of September, Ryanair said in a results statement.

That marked a seven percent increase from 1.1 billion euros from the same part of the previous financial year, sending shares soaring to a three-month high of 13.54 euros on the Dublin stock market.

Chief executive Michael O'Leary said it had faced "difficult market conditions" that included "the adverse economic impact of the Brexit vote in June which saw sterling weaken materially over the peak summer period".

The pound's Brexit-driven slump is reducing the amount Ryanair earns from its key British market once the currency is converted into euros -- the unit of Ireland and which the Dublin-based airline uses to price its earnings.

Britain accounts for 26 percent of Ryanair revenues and the airline recently slashed its planned growth in this country from 12 percent to around 5 percent.

As a consequence of Brexit uncertainty, it has also switched this additional capacity to other European countries.

'Creditable performance' 

O'Leary noted that the firm had put in a "creditable performance" in the first half as it had also faced the ongoing impact of air traffic control strikes and terror attacks.

Revenues advanced two percent to 4.1 billion euros but the airline cautioned Brexit would loom over its performance during the 2017/2018 financial year.

"The uncertainty over Brexit, and the final outcome of the UK's departure negotiations with the European Union, will continue to overhang our business," it added.

"We expect to see weaker sterling and slower economic growth in both the UK and Europe."

However, the carrier said its growth would continue and now anticipates it will carry 200 million passengers a year by March 2024 -- up from 180 million previously -- which would give it more than 20 percent of the short-haul market in Europe.

Ross Harvey, equity research analyst at Davy stockbrokers in Dublin, said that although Brexit and a falling British pound were concerns, 18 percent of the airline's costs were also denominated in sterling.

He added that 40 percent of their UK traffic is inbound, which might see an improvement in demand because of the weaker currency.

"Also, they can pivot growth elsewhere across their very wide network of 85 bases depending on market profitability," he told AFP.

Ryanair had already warned in late June that it would focus more on EU hubs over the next two years due to Brexit uncertainty.

"We have responded by reducing our planned UK growth in 2017 from 12 percent to approximately five percent, and switched this capacity to accelerate growth in markets such as Italy, Germany and other markets such as Belgium," the company added.

"We hope that the UK will remain a member of Europe's 'Open Skies' system, but until the final outcome of Brexit has been determined, we will continue to adapt to changing circumstances in the best interests of our customers, our people and our shareholders."

Britain's airlines face uncertainty on the horizon, having soared under the EU's Single European Sky system over the last two decades.

Among the mass of agreements that Britain will now have to renegotiate with Brussels are those governing flights between Britain and the rest of the EU.