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.


Apple contractor Foxconn posts below-forecast profit on soaring operating costs

Updated 5 min 30 sec ago
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Apple contractor Foxconn posts below-forecast profit on soaring operating costs

TAIPEI: Foxconn posted second-quarter net profit well below expectations as a rise in component costs and unsold inventory weighed on the performance of the Apple supplier and world’s top contract electronics maker, analysts said.
The company, formally known as Hon Hai Precision Industry Co. Ltd, reported net profit of T$17.49 billion ($567.25 million) late on Monday, 20 percent short of analyst expectations and slightly below the year-earlier results. Foxconn shares fell more than 3 percent on Tuesday.
Analysts said the results reflected concerns about a loss of momentum in global smartphone sales. Last week, Foxconn unit FIH Mobile Ltd. posted a wider first-half loss and acknowledged that it faced a high risk of saturation in the smartphone market.
Foxconn’s results showed that its gross margin narrowed in the second-quarter in part owing to the cost of carrying unsold inventory of the iPhone X. Overall global smartphone shipments fell 3 percent to 350 million units in the April-June quarter compared with a year earlier, market research firm Strategy Analytics says.
However, Vincent Chen, an analyst at Yuanta Research, predicted a brighter outlook projected by Apple would benefit Foxconn and boost its margins in the third quarter.
Apple has forecast above-consensus revenue for later in the year, when it typically launches new iPhone models. Reports suggest these models will use OLED screens, which can display colors more vividly.
“We expect Hon Hai to be the main assembler of OLED version new iPhones and we believe the OLED iPhone model will see better demand in 2H18F,” Chen said in a research note.
The company’s report also illustrates its moves to diversify by pushing into new areas such as display screens — it bought Sharp Corp. earlier this year — autonomous car startups and investments in cancer research.
Still, Foxconn earns most of its profits from manufacturing smartphones for Apple and other brands and from Foxconn Industrial Internet, a unit that makes networking equipment and smartphone casings, among other things.
“Investment in factory automation and component price hikes capped gross margin,” said Fubon Research analyst Arthur Liao. Foxconn’s operating costs jumped 18.8 percent in the quarter.
Liao noted that Foxconn absorbed some expenses related to the Sharp acquisition this quarter, as well as development costs from setting up a factory in the US, and taking Foxconn Industrial public in June.