Ryanair may face €50 million bill from Iceland volcano
Ryanair may face €50 million bill from Iceland volcano
Disruption to air travel caused by the volcanic eruption in Iceland will cost Ryanair about €50 million (£41.9m) this year, according to the budget airline’s chief executive Michael O’Leary - as his company faces compensation claims from passengers after the natural disaster.
O'Leary described the creation of a no-fly zone in Europe following the eruption as “completely unnecessary”. The ash crisis will disrupt Ryanair's profits for this year, which O'Leary otherwise forecast would rise between 10 per cent and 15 per cent - thanks to increases in passenger numbers and fares.
The company yesterday (1 June) reported a pre-tax profit of €341 million (£281m) in the 12 months to 31 March as revenues rose 2 per cent and passenger numbers jumped 14 per cent. The airline also proposes to pay a one-off dividend of €500 million (€0.34 per share) in October, subject to shareholder approval at the company’s shareholder approval at its September annual general meeting.
Ryanair's chief executive told a press conference to announce the results that “there was no ash cloud.” He said: “It was mythical. We’ve not been able to find it. It’s become evident that the airspace closure was completely unnecessary.”
He also said his airline was gearing up for a legal challenge against "unfair" EU regulations - which forced carriers to cover the costs of refreshments and accommodation for passengers who could not get home.
O’Leary said the volcanic eruption “led to repeated, unnecessary, closures of large swathes of European airspace over 18 days from 15 April”.
Ryanair cancelled around 9,400 flights because of the ash cloud and lost about 1.5 million passengers up to 18 May.
“The full cost of these cancellations will not be known for some time and will depend on the claims we receive under the unfair and disproportionate EU261 regulations,” O’Leary said.
He continued: “We estimate the cumulative exceptional cost of these unnecessary cancellations is approximately €50m and we will continue to up-date shareholders quarterly on the likely final outcome.
“The recent revisions of the Volcanic Ash Advisory Centres (VACC) charts for guesstimating the position of non-existent volcanic ash ‘clouds’ highlights the mismanagement of these eruptions by EU governments and regulatory agencies, who repeatedly and unnecessarily closed European air space.”
O’Leary added: “EU 261 is a manifestly unfair, disproportionate and discriminatory regulation which requires airlines to reimburse expenses of disrupted passengers even in force majeure cases.”
This story is brought to you by holidaylettings.co.uk.
2 June 2010
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