Ryanair is predicting an 'irrational' airline price war that could be great for customers | ||
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Budget airline tickets aren't exactly expensive right now thanks to low oil prices, but Ryanair thinks the cost of flying could fall even further. Irish no-frills airline Ryanair reported its full-year results this morning, which revealed a 12% jump in revenue to €5.65 billion (£4 billion, $6.16 billion) and a 66% rise in profit after tax to €867 million (£613 million, $946 million). But it warned investors not to expect a similar rise next year, due to competition from rivals on ticket prices. Here's Ryanair (emphasis ours): While our traffic growth this year will be strong, (up 10%), it would be foolish not to expect some irrational pricing response from competitors who cannot compete with our lowest costs and fares. Ryanair will remain vigorously “load factor active/price passive”. Therefore, even with the benefit of lower oil, aircraft and financing costs we may suffer periods of fare/yield weakness especially during the H2 winter season. What that basically means is that Ryanair plans to focus on filling its planes — measured by load factor — to reap benefits from efficiency, rather than cutting ticket prices to attract more customers. But if rivals do just that, it could hurt Ryanair's yield — a measure of revenue per customer, per mile flown — as it's forced to either trim prices or sees customer numbers fall. If all this were to happen, it would be good news for consumers, as airlines would be offering cheaper seats in a bid to win business. Ryanair, which celebrates its 30th birthday in July, has itself upped competition with its main European rival, easyJet, by focusing on customer service, something it was once notorious for being bad at. Ryanair has made changes including allowing customers to select seats at check-in and take an extra piece of hand luggage on board for free. The company praised its "Always Getting Better" transformation plan for helping boost customer numbers by 11% to 90.6 million in the year. This is what boosted revenue and profits, along with cheap oil. A drop in oil prices cut costs by 5% last year, but this is a smaller benefit than at other airlines. Ryanair buys 90% of its fuel well in advance through "hedging" agreements to guard against a jump in price. What this means is it agrees a price to buy the fuel many months before the actual deal is done. This protects the company from any sharp and unexpected price jumps. This practice will also pin back growth next year as oil is hedged at $92 (£59) a barrel, well above its current price of around $65 (£42) a barrel. Aer Lingus battleRyanair also used its results to attack the UK's Competition and Markets Authority (CMA). The watchdog has ordered Ryanair to sell its 29.8% stake in rival Irish airline Aer Lingus. The CMA argues the stake is anti-competitive and also puts off potential bidders for Aer Lingus. British Airways owner IAG has since been bidding for Aer Lingus, but an appeal by Ryanair to have its sell order revoke in light of the buyer interest was rejected. Ryanair said today: "We believe the CMA will be totally discredited if they do not reverse this manifestly erroneous ruling." The company added: "In the meantime our approach to the IAG offer remains unchanged. The Board of Ryanair will consider any offer (should we receive one) from IAG on its merits, if or when it is received." IAG and Aer Lingus are negotiating. Join the conversation about this story » NOW WATCH: Forget the Apple Watch — here's the new watch everyone on Wall Street wants  | ||
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REPORT: Germany's two most important politicians are split over Grexit | ||
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When Greece is locked in bailout talks with its international creditors, there are only two German politicians that markets seem to pay attention to — finance minister Wolfgang Schaeuble and of course, Chancellor Angela Merkel. But it seems there's a split between the two on the best approach to the Greek situation. According to German newspaper Die Welt, Merkel is still unwilling to really consider the idea of a Grexit (Greek exit from the eurozone). Schaeuble, on the other hand, sees acceptance of a possible Grexit as an important bargaining tool for Germany and the rest of the eurozone. If Grexit is ruled out, he things that gives Athens too much of a powerful negotiating stance. According to the report, that's one of the reasons that Schaeuble sees the inclusion of the International Monetary Fund (IMF) in negotiations as important. The Fund is more used to taking a touch line against its borrowers, whereas the European Commission is thought to be more preoccupied with keeping Greece in the euro, and willing to give away a more generous deal. The leaked deal proposals that we saw nearly two weeks ago would tend to reinforce that line — the proposals which reportedly came from the European Commission were relatively vague and noncommittal on reforms, the opposed of what Schaeuble and the IMF would want. Merkel also has to deal with her own restless political party, many of whom favour Schaeuble's stern stance. Reports at the time of the tentative February agreement that Greece would continue its bailout suggested there was very strong opposition against it within Merkel's Christian Democrats. Though the Chancellor has managed to get them to toe the line so far, that's not guaranteed forever. Die Welt reports that Merkel is backed by the German foreign ministry, which aligns with reports that Merkel will paint any deal with Greece as necessary for European security. A May 19 Bloomberg article suggests she will make the geopolitical instability of a southern part of Europe splitting off from the bloc a major part of her argument for an agreement. Here's a snippet from that report: Merkel would hold the speech after Greece and its creditors agree on a deal with conditions she deems strong enough to sell to parliament and the German public, according to two government officials. She would argue that a Greek exit from the euro area would risk causing geopolitical instability in the region, said the officials, who asked not to be identified because the discussions are private. That approach may be more convincing to sceptical German conservatives than appeals to pan-European solidarity. But to get to that point, either Athens or the international institutions still need to make major compromises on issues like pension reform. If that doesn't happen, Grexit could occur no matter who wants it. Join the conversation about this story » NOW WATCH: 'The Little Prince' trailer looks better than anything Pixar has made in years  | ||
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Several Kenyan police killed in Shebab attack near Garissa: security sources | ||
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Nairobi (AFP) - Several Kenyan police officers were killed overnight in an ambush by suspected Shebab militants in the northeast of the country and close to the border with Somalia, officials and security sources said Thuesday. Local officials said more than 10 officers may have been killed in Monday night's ambush, while Kenyan media reported the number of dead could be as high as 20. "The area is on the remote side of Garissa not far from the border, that is why we are having a problem getting information instantly," said a police officer based at the county headquarters. "What we however know is that several officers have been killed."
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Britain hinges on a Brexit as David Cameron is left out of EU treaty talks | ||
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It is a distinct possibility that Britain could leave the European Union, when the Conservative party presents the country with an in-out referendum by 2017, as Prime Minister David Cameron is already failing to negotiate "a better deal" for the UK within the 28 member bloc. Over the last few days, Cameron was in Brussels to try and start negotiating the terms of membership within the EU. However, according to France's Le Monde newspaper as reported by the Guardian, Germany and France sidestepped Cameron's demands to renegotiate the Lisbon Treaty and sealed a pact to "integrate the eurozone without reopening the EU’s treaties." Le Monde says that the French and German proposals will be presented at the EU summit in Brussels in June, while Cameron will unveil his list of changes Britain wants, if the country is to stay within the bloc. The Lisbon Treaty is the successor to the European Union Constitution, which became law in 2009. It includes heightened powers for the European Commission, European Parliament and European Court of Justice. It also opened the doors for more freedom of movement between EU members and greater control from Brussels over the final say for asylum applications. Though the Tories are pushing through the promise of a referendum, the party is largely against leaving the EU. In January last year, UK Chancellor George Osborne said the Tories were determined to deliver on the promise of a referendum but they would prefer to stay within the EU and negotiate "a better deal." "Our determination is clear: to deliver the reform and then let the people decide," Osborne said in a speech at a Tory party conference on January 14. "It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline. And so there is a simple choice for Europe: reform or decline." Senior Brussels officials have repeatedly said they were not keen to reopen the Lisbon Treaty. However, Le Monde says the French and German proposal to strengthen the integration of EU member states without reopening the treaties will shut the door on Britain renegotiating its terms of its membership. This could be a huge blow to Cameron's Conservative party to drum up support for Britain to stay within the EU. Only four days after Britain's General Election this month, ING's senior economist James Knightley warned that the UK's status as an EU member is on a knife edge. ING warned that the 3.8 million people who voted for the UK Independence Party, which is opposed to staying in the union, could be a massive threat to Britain's membership. The amount of people who voted for UKIP was larger than the Liberal Democrats and the Scottish National Party combined. The latest Eurobarometer public opinion survey shows just 23% of Britons have a “generally positive” view of the EU, with only Greece having a lower rating (22%), highlighted ING. Furthermore, immigration topped the monthly Economist/Ipsos MORI poll when people were asked: “What do you see as the most important issue facing Britain today?” Immigration/immigrants was the top answer at 37%, with the economy on 33%. Join the conversation about this story »  | ||
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Amazon says has begun declaring sales in UK, Germany, Spain, Italy | ||
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Paris (AFP) - Online retail giant Amazon said it has started declaring sales made in major European markets in the respective countries instead of Luxembourg, meaning it will pay taxes on the sales in the nations. "As of May 1, Amazon... is recording retail sales made to customers through... branches in the UK, Germany, Spain and Italy," the company said in a statement. "Previously, these retail sales were recorded in Luxembourg. We are working on opening a branch for France." Amazon's tax deals in Luxembourg had attracted howls of criticism that the giant was trying to evade taxes, and had sparked an EU probe. Join the conversation about this story »  | ||
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