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Ryanair (RYAAY) October Traffic Rises Despite Headwinds

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Ryanair Holdings plc (RYAAY - Free Report) posted impressive October traffic numbers despite numerous flight cancellations due to ATC staff shortages, inclement weather and labor-unrest. Traffic in the month (including 0.5 million from its LaudaMotion unit) rose 11% year over year to 13.1 million, while load factor remained unaltered at 96%. Traffic numbers were driven by cheap air fares.

Success of the Laudamotion unit’s summer schedule also aided results. However, excluding traffic from LaudaMotion unit, this European low-cost carrier’s passenger growth was only 7% in the month.

In October, Ryanair had to cancel more than 300 flights due to winter storms and a five-day airport handler strike at Brussels Zaventem as well as some adverse weather conditions (winter storms). Also, the carrier’s service in the month was disrupted by the ATC staff shortages in the UK, Germany and France.

Continued labor unrest, high costs and other headwinds had impacted Ryanair’s results in the first half of fiscal 2019 (ended Sep 30, 2018), disclosed last month. The headwinds resulted in a 7% decline in profit after tax to €1.2 billion.

For fiscal 2019, profit after tax (excluding Laudamotion) is projected between €1.10 billion and €1.25 billion. The carrier also remains concerned about a Brexit-related impact. Moreover, its fuel bill in the fiscal year is expected to be roughly €460m higher than the figure registered in fiscal 2018.

We note that Ryanair is not the only carrier to feel the pinch of a rise in fuel costs. Its U.S.– based counterparts like Delta Air Lines, Inc. (DAL - Free Report) , American Airlines Group Inc. (AAL - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) have also been hurt by increase in oil prices.

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