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Ryanair warns of job losses as Boeing 737 Max troubles hit airline

Tom Belger
·Finance and policy reporter
FILE - In this Wednesday, Sept. 12, 2018 file photo, a Ryanair plane is parked at the airport in Weeze, Germany. Europe's biggest airline by passengers, budget carrier Ryanair, will cut flights and close some of its bases beginning this winter because of the delay to deliveries of the Boeing 737 Max plane, which has been grounded globally after two fatal crashes. The airline warned Tuesday, July 16, 2019, its growth in European summer traffic for 2020 will be lower than expected because of the slowed deliveries. (AP Photo/Martin Meissner, File)
Ryanair has been hit by problems at Boeing. Photo: AP Photo/Martin Meissner

Ryanair is warning of job losses this winter as it blamed the Boeing 737 Max scandal for making some of its bases unprofitable.

The airline (RYA.L) said in its half-year results on Monday there could be further delays reintroducing the planes, which were grounded worldwide after two fatal crashes earlier this year.

Chief Executive Michael O'Leary said there remained a “real risk” of not having any of the planes back in service next summer, but reduced the expected number from 30 to 20.

Pilots and cabin crew will see their roles axed as the company said it would have to cut or close “a number” of loss-making bases. It did not say how many staff would be affected.

READ MORE: Airbus slashes production targets despite rival Boeing's troubles

It also warned Boeing’s troubles resolving safety concerns had meant higher maintenance costs on other existing planes, as “older aircraft remain in the fleet.”

The company downgraded its hopes for passenger growth from 162 to 157 million customers in the next financial year to the end of March 2021.

The company said in its results: "Sadly, due to the Max delivery delays, we will be forced to cut or close a number of loss making bases this winter leading to pilot and cabin crew job losses.

"We continue to work with our people and their unions to finalise this process."

It added that fuel bills had risen 22% amid higher prices.

The airline said in a filed statement its pre-tax profits dipped 0.3% to €1.26bn (£1.09bn), though its profits after tax were 0.2% higher and beat analyst forecasts at €1.15bn.

It narrowed its full-year forecast to the end of March to $800-900m, in line with analyst forecasts of €836m, according to Reuters.

Adam Vettese, an analyst at investment platform eToro, said: “Despite being Europe’s largest airline, Ryanair is not immune from the problems facing the travel industry at the moment.

“Rapidly rising fuel and staff costs, overcapacity issues and Brexit-related uncertainty are all combining to make life very difficult for travel operators.

“The budget airline has also been particularly affected by grounding of the troubled Boeing 737 MAX-200 on safety issues, revealing it expects to get just a third of the planes it ordered by spring and has therefore cut its profit and traffic guidance.

“Unfortunately, none of these issues are easily fixed, meaning both Ryanair and the wider industry could be facing turbulence for some time yet.”