The Ryanair chief executive, Michael O’Leary, said he expected more airlines to go bust as the budget carrier posted a 7% drop in profits because of rising fuel prices and strikes hitting costs and bookings.
O’Leary predicted a grim winter for the aviation industry, with oil prices, interest rates and the US dollar rising and fares falling.
Several smaller airlines have collapsed in recent weeks, including the Cypriot carrier Cobalt last week, the Danish carrier Primera Air and the Swiss airline SkyWork. The UK regional airline Flybe warned of mounting annual losseslast week, blaming weaker consumer demand and higher fuel prices.
Ryanair reported a fall in net profits to €1.29bn (£1.1bn) in the six months to 30 September, with its average fare down 3% to less than €46.
The company, Europe’s biggest budget airline, already cut its forecast for full-year profit by 12% last month. It has been hit by a wave of strikes by pilots and cabin crew across Europe, which have damaged bookings and pushed up compensation costs. Ryanair said 2018 will also be the worst year on record for European air traffic control strikes.
Neil Wilson, the chief market analyst at Markets.com, said: “Airlines are generally facing serious headwinds from a stronger dollar, higher oil prices and rising interest rates – Ryanair is less critically exposed to all of those but the strikes and unionisation are dragging it into the mire.
“The key question is whether management can sort out strikes before customers completely lose faith. The longer strikes go on the more customers shy away from the brand and look elsewhere – hence we are seeing Ryanair slashing prices.”
Ryanair is facing calls for a boycott on Twitter after a racist incident on one of its flights, which it has referred to Essex police.
The airline faces criticism that it did little to prevent a male passenger inflicting a tirade of racist abuse on a 77-year-old woman. Ryanair apparently did not remove the passenger from the flight from Barcelona, instead moving the woman from her seat.