Ryanair cutting fares by 30% to fill Catalonia flights

Ryanair Chief Executive Michael O’Leary said: ‘To fill the aircraft we had to lower the fares (for flights to Barcelona) very significantly.’ (PA Photo)
Updated 14 February 2018
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Ryanair cutting fares by 30% to fill Catalonia flights

MADRID: Ryanair has been cutting fares by up to 30 percent to fill flights to Barcelona and other cities in Catalonia as holiday-makers are nervous of political upheaval in the Spanish region, Chief Executive Michael O’Leary said on Tuesday.
Tourist numbers in Barcelona dipped after an attack in August left 16 people dead and an illegal independence vote prompted scenes of police violence and mass protests, but have since rebounded.
Ryanair still plans to increase capacity in Spain as a whole sharply in the coming year, adding 9 percent more flights in the year to March 2019, O’Leary said, compared with an increase of 6 percent in its network as a whole.
“To fill the aircraft we had to lower the fares (for flights to Barcelona) very significantly,” O’Leary told a press conference in Madrid. “The fares are significantly lower as we approach the summer than they were last year,” he said, though demand for travel to Madrid remained strong.
Capacity in Spain has increased in recent years as operators have moved from destinations in the Middle East and North Africa in the wake of attacks on tourists.
The number of international tourists visiting Spain broke records for a fifth straight year in 2017, climbing 8.9 percent year-on-year to 82 million.
One threat to Ryanair’s rapid expansion plans are relations with pilots. While strike threats in December were averted by a pledge to recognize labor unions for the first time, the airline has so far managed to reach a recognition agreement with only one of the seven unions with which it is in talks.
O’Leary said Spain’s SEPLA pilots’ union had not yet responded to offers of a pay rise and terms for union recognition and Ryanair was considering bypassing the union and offering the increase directly to pilots — something it has done in Ireland.
SEPLA said in a statement it had told Ryanair it would not negotiate with it until it allowed it to represent both pilots employed directly and those employed indirectly as contractors.
It also said it would recommend pilots reject a proposed salary increase as long as it was dependent on recognizing Ryanair’s system of employee councils at airports, which it said are appointed unilaterally by management.
The union said it had offered to poll pilots on the proposed pay increase, but that Ryanair had refused to give it a list of serving pilots. Ryanair did not immediately respond to an emailed request for comment.


Dubai property developers put bond plans on hold

Updated 21 min ago
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Dubai property developers put bond plans on hold

  • Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales
  • Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year

DUBAI: Dubai’s Emaar Properties and state-owned developer Nakheel have put on hold plans to issue US dollar-denominated bonds, Emaar and sources familiar with the bond issues said, amid a real estate downturn and volatility in emerging markets.
Emaar told Reuters that it had put on hold a planned bond issue, blaming rising interest rates but did not elaborate. Nakheel declined to comment.
Three financial sources said the firms had planned dollar-denominated sukuk, or Islamic bonds, and would have had to pay a yield premium to attract enough investors due to concerns about Dubai’s property price slide and emerging market volatility.
Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales, although the slide has not come close to the more than 50 percent plunge seen in 2009-2010, which pushed Dubai close to a debt default.
Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year, according to Savills. The drop has hurt developer earnings.
Emaar, developer of Burj Khalifa, the world’s tallest building, reported a 29 percent fall in the third quarter last year, while Dubai’s second-largest listed developer DAMAC reported a 68 percent drop.
The financial sources said Emaar and Nakheel hired banks a few months ago to issue Islamic bonds but shelved the plans.
An Emaar spokesperson said its decision to put its plan on hold was not linked to the property market performance.
“The bond was considered more than a year ago and was put on hold due to increasing interest rates. The decision was not based on market conditions,” the spokesperson said.
Dubai government owns a minority stake in Emaar.
Nakheel, developer of palm shaped islands off Dubai, was one of the worst hit by Dubai’s 2009-2010 real estate crash, forcing it into a massive debt restructuring. It has not issued public debt since it nearly defaulted in 2009.
The market downturn has put pressure on property companies’ existing bonds, which investors use as a parameter to establish the price of new debt sales from borrowers in the same sector.
In secondary debt markets, yields of bonds issued by Dubai developers have risen significantly over the past few months, underperforming corporate debt from other sectors.
DAMAC’s $500 million sukuk due in 2022 and $400 million Islamic paper due in 2023 saw their yields spike by over 200 bps and 150 bps, respectively, since early November.
BofA Merrill Lynch last week forecasted weaker booked sales and gross margin for DAMAC, saying it was likely to be pressured by the property market and upcoming debt and land payments.
DAMAC did not immediately respond to a request for comment.
Yields on a $600 million sukuk issued by private developer Meraas, due in 2022, have jumped by around 120 basis points in the same period. Meraas declined to comment on the move.