Ryanair airs profit warning for second time in three months

Europe’s largest low-cost carrier now expects profit after tax for its financial year to March 31 of between €1 billion ($1.14bn) and €1.1bn. (Reuters)
Updated 18 January 2019
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Ryanair airs profit warning for second time in three months

  • The Irish airline had originally forecast profits of €1.25bn to €1.35bn
  • Ryanair lay the blame squarely on lower than expected fares in the second half of its financial year

DUBLIN: Ryanair cut its forecast for full-year profit for the second time in three months on Friday, this time blaming lower than expected winter fares, and said it cannot rule out a further downgrade if Brexit causes unexpected developments.
Europe’s largest low-cost carrier now expects profit after tax for its financial year to March 31 — excluding start-up losses at its Laudamotion unit — of between €1 billion ($1.14bn) and €1.1bn, compared to a previous estimate of €1.1bn to €1.2bn.
The Irish airline had originally forecast profits of €1.25bn to €1.35bn before October’s profit warning took account of a series of strikes across Europe during the summer that hit traffic and bookings, but have since subsided.
On Friday, Ryanair lay the blame squarely on lower than expected fares in the second half of its financial year. Those fares were set to fall by 7 percent, rather than the 2 percent previously flagged, due to short-haul overcapacity in Europe, it said.
The lower fares have, however, been partially offset by stronger than expected annual traffic growth — now expected to grow by 9 percent to 142 million passengers — slightly better than expected unit costs and stronger ancillary sales.
Ryanair Chief Executive Michael O’Leary said a further downgrade of the profit outlook was possible given uncertainty about the terms of Britain’s planned departure from the European Union at the end of March.
“While we have reasonable visibility over forward Q4 bookings, we cannot rule out further cuts to air fares and/or slightly lower full year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March,” O’Leary said in a statement
Still, the better than expected unit cost performance allowed the carrier to cut its projected start-up losses in Lauda to €150 million from €140m.
O’Leary said the fact that the airline was passing on lower air fares to customers would continue to be good for Ryanair’s traffic growth and business over the medium to long term.


Gulf defense spending ‘to top $110bn by 2023’

Updated 15 February 2019
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Gulf defense spending ‘to top $110bn by 2023’

  • Saudi Arabia and UAE initiatives ‘driving forward industrial defense capabilities’
  • Budgets are increasing as countries pursue modernization of equipment and expansion of their current capabilities

LONDON: Defense spending by Gulf Arab states is expected to rise to more than $110 billion by 2023, driven partly by localized military initiatives by Saudi Arabia and the UAE, a report has found.

Budgets are increasing as countries pursue the modernization of equipment and expansion of their current capabilities, according to a report by analytics firm Jane’s by IHS Markit.

Military expenditure in the Gulf will increase from $82.33 billion in 2013 to an estimated $103.01 billion in 2019, and is forecast to continue trending upward to $110.86 billion in 2023.

“Falling energy revenues between 2014 and 2016 led to some major procurement projects being delayed as governments reigned in budget deficits,” said Charles Forrester, senior defense industry analyst at Jane’s.

“However, defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again.”

Major deals in the region have included Eurofighter Typhoon purchases by countries including Saudi Arabia and Kuwait.

Saudi Arabia is also looking to “localize” 50 percent of total government military spending in the Kingdom by 2030, and in 2017 announced the launch of the state-owned military industrial company Saudi Arabia Military Industries.

Forrester said such moves will boost the ability for Gulf countries to start exporting, rather than purely importing defense equipment.

“Within the defense sector, the establishment of Saudi Arabia Military Industries (SAMI) in 2017 and consolidation of the UAE’s defense industrial base through the creation of Emirates Defense Industries Company (EDIC) in 2014 have helped consolidate and drive forward industrial defense capabilities,” he said.

“This has happened as the countries focus on improving the quality of the defense technological work packages they undertake through offset, as well as increasing their ability to begin exporting defense equipment.”

Regional countries are also considering the use of “disruptive technologies” such as artificial intelligence in defense, Forrester said.

Meanwhile, it emerged on Friday that worldwide outlays on weapons and defense rose 1.8 percent to more than $1.67 trillion in 2018.

The US was responsible for almost half that increase, according to “The Military Balance” report released at the Munich Security Conference and quoted by Reuters.

Western powers were concerned about Russia’s upgrades of air bases and air defense systems in Crimea, the report said, but added that “China perhaps represents even more of a challenge, as it introduces yet more advanced military systems and is engaged in a strategy to improve its forces’ ability to operate at distance from the homeland.”