Ryanair’s cancellation crisis will cost it at least €125m

Ryanair Tuesday said refunds to passengers and new deals for pilots will cost it €70 million (£61.6 million) over the next six months, in the wake of its cancellation crisis.

Ryanair was forced to cancel thousands of bookings in September after what the airline said at the time was a pilot rostering error. Reports later emerged suggesting Ryanair was struggling to attract and retain pilots.

The budget airline said refunds to customers cost it €25 million (£22 million) in the six months to the end of September.

CEO Michael O’Leary said in a statement that the crisis has also “challenged us to address the competitiveness of our pilot pay, as well as pilot concerns about communications, career progression and basing.

“We will now move from being “competitive” to offering materially higher (over 20%) pay with better career prospects, superior rosters, and much better job security than Norwegian, among others, can offer,” he said.

The new contracts will cost Ryanair an estimated €45 million (£39.6 million) in the second half of its financial year and as much as €100 million (£88 million) in a full year.

While O’Leary made concessions to pilots’ demands, he appeared unrepentant about Ryanair’s previous practices.

He attacked a “renewed campaign of misinformation by competitor airline pilot unions,” adding: “We understand that the reason they wish to denigrate Ryanair is because their airlines cannot compete with us.”

“As usual when these union airlines fail, such as Monarch, Air Berlin and Alitalia in recent months, their pilots all come to Ryanair seeking jobs that pay up to €175,000 p.a., deliver a double bank holiday weekend every week, with the best promotions record and, the best job security in Europe,” O’Leary said.

“We will continue to work hard to deliver for our people, our customers and our shareholders while these competitor unions will continue to rail and fail.”

O’Leary’s bullish comments came as Ryanair reported strong half-year results despite September’s crisis. Results to September 30 show:

• Revenue up 7% to €4.4 billion (£3.8 billion).
• Customer numbers up 11% to 72.1 million.
• Pre-tax profits up 11% to €1.2 billion (£1 billion).

“These strong H1 results reinforce the robust nature of Ryanair’s low fare, pan-European growth model even during a period which suffered a material failure in our pilot rostering function in early September,” O’Leary said.

Ryanair says it expects customer growth to slow to 4% in the second half of the year as a result of cancelled flights and says costs in the second half of the year will rise by 2% as a result of the measures to address the cancellation crisis.

Full year profits are still forecast to be between €1.4 billion and €1.45 billion but the airline says this is “heavily dependent on close-in H2 bookings, the absence of any further security events, ATC strikes or negative Brexit developments.”