This airline company has been TOO cheap
Ryanair has hit turbulence… and the company just slashed its profit forecast for its fiscal year to between $1.39 billion and $1.27 billion. These figures fall about $174 million short of what the company had initially anticipated. The reason? Two things: employee strikes and flight cancellations. Both these factors have led to reduced bookings and lower fare prices.
Fuel costs haven’t helped… and shares dropped 10% and are down more than 22% on the year. However, the problem may not be with Ryanair, but rather the business model of low-cost airlines in general.
Here’s the problem… it includes labor disputes, decreasing profit margins, and rising customer dissatisfaction. These issues have continued to plague Ryanair and other low-cost airlines for quite some time. Even Ryanair rival, EasyJet, has reported similar problems and gave a meek profit outlook.