Ryanair (RYA) chief executive officer Michael O’Leary will be sticking around until at least July 2024 under a new group structure that will hopefully help the embattled carrier navigate difficult times.

Airlines have been struggling with trade disputes, rising fuel prices and overcapacity, forcing companies to slash prices to get more bums on seats.

Over the next year, Ryanair plans to move to a similar structure to British Airways owner International Consolidated Airlines (IAG) by splitting the business into four airline subsidiaries.

These subsidiaries will be Ryanair DAC, Laudamotion, Ryanair Sun and Ryanair UK, which will be led by separate chief executives and management teams.

The airline hopes the new structure will help cut costs and boost operating efficiencies, as well as encourage small-scale acquisitions during a particularly tough time for the industry.

MORE AIRLINE FAILURES EXPECTED

‘We expect more closures and airline failures in 2019 due to overcapacity in the European market, which is causing continued fare weakness,’ comments Ryanair.

Airlines which have recently ceased trading include Danish airline Primera and Swiss airline SkyWork.

The chart below shows Ryanair's 14.7% market share is almost as large as industry leader Lufthansa Group.

Unfortunately, low prices have put pressure on profits with Ryanair recently warning on profitability.

In the last quarter of 2018, a 6% fall in fares offset the impact of higher passenger numbers pushing the company to a loss of roughly €20m from a profit after tax of €105.6m in the same period of 2017.

QUESTION MARKS OVER O’LEARY’S REIGN

Ryanair is positive that O’Leary’s leadership will help the airline’s prospects yet the market reaction implies shareholders may not agree as the shares have dropped 4.8% to €10.89.

AJ Bell investment director Russ Mould says investors are right to question whether O’Leary is the right man to help the firm grow considering its recent patchy track record and stalling share price.

However Mould does agree that the new structure should distance O’Leary from the unions and day-to-day operations leaving him to focus on controlling costs, buying aircraft and pursuing acquisitions.

The share reaction may also be linked to no-deal Brexit concerns. Ryanair says the risk of a no-deal Brexit remains ‘worryingly high’ and has taken steps to protect its three domestic UK routes.

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Issue Date: 04 Feb 2019