Ryanair to cut back on UK flights in favour of EU routes due to Brexit
Ryanair, which is Europe’s largest low-cost airline, will focus on growing at airports in the EU and shift its focus away from the UK, following Britain’s vote to leave the EU. It had keenly campaigned for Britain to stay part of the EU, said the Brexit vote both a “surprise” and a “disappointment”. It will shift away from the UK, for the next two years, until some clarity emerges on UK’s long term political and economic relationship with the EU. There is no certainty about what impact Brexit will have on regulation of aviation. Ryanair will cut capacity and frequency on many Stansted routes (although no routes will close). It expects that Brexit will lead to weaker sterling, slower growth in the UK and EU economies and downward pressure on fares, until at least the end of 2017. Ryanair hoped its UK registered competitors (like EasyJet) would no longer be permitted to operate intra EU routes, or would have to divest their majority ownership of EU registered airlines, and that would benefit Ryanair. It expects to keep making profits, but it might have to cut fares to encourage more people to fly. An analyst at Cantor Fitzgerald, said Ryanair “is cautious on the impact of Brexit and we expect it to continue to offer deep discounts through the rest of the year to keep cabins full.”
Ryanair to cut back on UK flights in favour of EU routes after Brexit vote
Ryanair warned ‘that post Brexit there are significant risks to the downside during the remainder of the year’.
By Zlata Rodionova (Independent)
Ryanair, Europe’s largest low-cost airline, will focus on growing at airports in the EU and shift its focus away from the UK, following Britain’s vote to leave the EU.
The company, which openly campaigned for Britain to stay part of the EU, called the Brexit vote both a “surprise” and a “disappointment”, in a trading statement on Monday morning.
Ryanair said it will shift its strategy away from the UK while some clarity emerges on UK’s long term political and economic relationship with the EU.
“In the meantime, 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) where we are already significantly ahead of our multiyear traffic growth targets,” the company said.
The airline said it was unable to predict the effect the vote to Leave the EU will have on its business and regulations.
But Ryanair predicted the Brexit vote will lead to a weaker sterling, slower growth in the UK and EU economies and downward pressure on fares, until at least the end of 2017.
However, it acknowledged it could create new opportunities, depending on post-Brexit new regulations.
“There may also be some opportunities if our UK registered competitors are no longer permitted to operate intra EU routes, or must divest their majority ownership of EU registered airlines.”
Transport stock slid in the week following the EU referendum as fears for the UK economy intensified after the UK’s shock decision to leave the EU.
Easyjet was one of the biggest losers on the FTSE 100 with shares closing down 22.32 per cent to 1,020p on Monday June 27.
The budget airline joined IAG, the owner of British Airways and Aer Lingus, in warning that a drop in travel demand and a slide in the value of the pound could hurt earnings for the rest of the summer.
Ryanair shares also fell by 13.9 per cent, following the EasyJet warning.
Ryanair’s announcement comes as it unveils its first quarter sales and profits. First quarter net income rose 4 per cent year-on-year to €256m (£213.7m), while revenue rose 2 per cent to €1.69bn (£1.41bn).
Customers increased by 11 per cent to 31 million.
Ryanair said that market volatility provoked by a string of terrorist attack and repeated industrial action, particularly in France, cause nearly a thousand cancellations.
The company maintained its full year guidance saying profits will rise by approximately 12 per cent between €1.375 billion and €1.425 billion.
However, Ryanair warned “that post Brexit there are significant risks to the downside during the remainder of the year.”
Ryanair to cut down on flights from UK – but what does it mean for upcoming Newcastle routes?
The budget airline Ryanair recently announced it is to introduce eight new routes from Newcastle Airport
Ryanair is to “pivot” growth away from UK airports and instead focus on hubs in the European Union following the Brexit referendum result.
The budget airline this month announced it was introducing eight new routes from Newcastle Airport, including flights daily to Majorca’s capital Palma; twice-weekly to Girona in Spain; and five a week to Faro in Portugal.
But bosses said on Monday the decision by Britain to quit the European Union was “a surprise and a disappointment”, adding: “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) where we are already significantly ahead of our multi-year traffic growth targets.”
Ryanair also flagged that the vote result will mean lower economic growth, weaker consumer confidence and put downward pressure on fares until the end of 2017 “at least”.
It is thought flights in and out of Newcastle will be unaffected.
The company said there could be further implications if the UK is unable to negotiate access to the single market and the open skies regulatory framework currently in place across the EU.
However, the Irish carrier added that it could benefit if “our UK registered competitors are no longer permitted to operate intra-EU routes, or must divest their majority ownership of EU registered airlines”.
The company made the remarks alongside first-quarter results, which saw net income rise 4% to €256m (£214m) and revenue rise 2% to €1.69bn (£1.4bn).
Ryanair said it was hit by market volatility arising from terrorist events and repeated air traffic control strikes in the period, particularly in France, which caused almost 1,000 flight cancellations.
Robin Byde, analyst at Cantor Fitzgerald, said: “The company is cautious on the impact of Brexit and we expect it to continue to offer deep discounts through the rest of the year to keep cabins full.
“Nonetheless, these results demonstrate the resilience of the Ryanair business model and we expect consensus forecast to be unchanged at this time.”
Ryanair shuns U.K. airports after shock Brexit vote
by Alanna Petroff (CNN Money)
July 25, 2016
On Monday, Ryanair (RYAAY) issued a statement saying it would “pivot our growth away from U.K. airports and focus more on growing at our [European] airports over the next two years.”
It also plans to “cut capacity and frequency on many … routes” from London’s Stansted airport, which is a regional hub for budget flights. The company did not mention plans to cut flights out of Gatwick or Luton, the other London airports it operates out of.
U.K.-based competitor easyJet (ESYJY) also warned that it’s already seeing higher costs for its operations after the U.K. pound dropped by about 12% following the Brexit vote. A large portion of its costs are paid in dollars and euros. However, the airline said it planned to keep growing in the U.K. despite the headwinds.
Ryanair and other airlines had actively encouraged U.K. voters to remain in the European Union, arguing that a vote to leave would lead to higher flight prices.
The U.K. government will soon be tasked with renegotiating travel rules and regulations as the country moves to leave the European Union bloc. Any new regulatory restrictions could lead to higher costs for carriers and travel companies, which would likely be passed on to consumers.
Related: These countries are getting too scary for tourists
This industry tumult comes as the British government has been under renewed pressure to make a decision about where to build a new airport runway. London’s Heathrow airport and Gatwick airports had been aggressively campaigning to get permission to build a new runway, though the government will have the final say on the matter.
“It is vitally important we get the decision right,” said a spokesperson at the U.K.’s Department for Transport.
The government has said that expanding airport capacity is crucial for the U.K.’s long-term prosperity, and a new runway could create tens of thousands of new jobs, both directly and indirectly.
Brits spend nearly £20 billion ($26.2 billion) per year on tourism in the EU, and take 29 million holidays in EU countries each year.
However, demand for travel has been sapped in recent months following a spate of terrorist attacks combined with the Brexit fallout. This has forced budget airlines to lower their prices even further.