Ryanair to ground planes
Posted on June 2nd, 2008 in Featured - >> Add a comment below
Low cost carrier Ryanair is poised to announce the grounding of up to 20 aircraft this winter in anticipation of falling demand, say analysts, despite reporting record passenger numbers in May.
The low-cost airline will report substantial profits for the year to March on Tuesday, but chief executive Michael O’Leary has warned that Ryanair profits will tumble while the oil price stays around $135 a barrel.
Ryanair carried more than five million passengers last month, up 22% on a year earlier. However, analysts predict the carrier will ground aircraft during off-peak periods this winter after grounding several aircraft at Stansted in the winter just gone.
O’Leary has been in the forefront of predicting a serious downturn in the industry. But unlike his rivals, the Ryanair boss has gambled on oil prices coming down in the near future and not bought future supplies in advance at lower prices – a practice known as hedging. British Airways is currently flying on jet fuel from oil bought at £85 a barrel, for example.
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