Poor planning amid aggressive expansion could taint Ryanair
London — Ryanair risks reviving its reputation for slack customer service with a move to scrap hundreds of flights to the end of October because of poor planning amid aggressive expansion.
The cancellations could leave hundreds of thousands of passengers in the lurch, undermining efforts by Europe’s biggest discount airline to improve its image and woo more lucrative customers.
Ryanair began its Always Getting Better programme in 2014 to make flying with the no-frills carrier less onerous, introducing faster boarding for business travellers, discounts for children and sleeker cabins.
"It is the potential for long-term damage that concerns us," Damian Brewer, an analyst with RBC Capital Markets, said on Monday in a note to clients. "The poor public relations could deter future bookings and may put off more time-sensitive, higher-yielding demand, like business trips, if the carrier is seen as unreliable and less punctual."
While the scrapped flights account for only about 2% of normal daily operations, the cause was avoidable.
As it ramped up capacity, Ryanair overscheduled its crews, which has led to a backlog of leave days as it scrambles to meet holiday requirements by Irish authorities.
"We have messed up in the planning of pilot holidays and we’re working hard to fix that," chief marketing officer Kenny Jacobs said.
The Dublin-based carrier expects to cancel 40 to 50 flights a day until the end of October out of about 2,200 normal daily services. As many as 385,000 passengers could be affected over the six-week plan, according to Bloomberg calculations based on the airline’s data.
A total of 162 flights were cut between Saturday and Sunday, with another 164 due to be cut until Wednesday.
Ryanair will offer refunds or alternative flights to customers affected by the cancellations. It says the move should not have an effect on earnings in September and October.
Shares of Ryanair dropped as much as 4.8% and were trading down 1.8% at €16.77 in Dublin on Monday. That pared the stock’s gains in 2017 to 16%, valuing the company at €19.9bn.
Ryanair is mandated by the Irish Aviation Authority to bring staff leave in line with the calendar year from January 1, requiring it to distribute the backlog before the end of 2017.
That left the carrier without enough pilots and flight attendants to operate its full fleet of Boeing 737s until the start of its winter timetable in November.
The airline was facing tens of millions in lost revenue as a result of the cancellations, refunds and compensation claims under EU aviation rules, Liberum analyst Gerald Khoo said. He lowered earnings forecasts for the company by just under 5%.
The move may help bring punctuality back up to 90% by providing additional standby aircraft, after Ryanair’s on-time performance fell below 80% in the first two weeks of September on delays from air traffic control issues in France, the UK, Germany and Spain as well as thunderstorms, it said in a release late on Friday.
Ryanair flew 12.7-million passengers in August, with 97% seat occupancy.