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Ryanair posts first quarterly profit since COVID but annual loss looms

By Conor Humphries

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Ryanair posts first quarterly profit since COVID but annual loss looms
© Reuters. FILE PHOTO: A Ryanair plane takes off from Manchester Airport as the spread of the coronavirus disease (COVID-19) continues in Manchester, Britain June 21, 2020. REUTERS/Phil Noble/File Photo GLOBAL BUSINESS WEEK AHEAD

By Conor Humphries

DUBLIN (Reuters) – Ryanair on Monday reported its first quarterly profit since before COVID-19, but downgraded its annual forecast to a loss as it prepared to slash winter prices to build momentum for what it believes will be a bumper summer next year.

Europe’s largest budget airline, which flew more passengers this summer than any European rival, made a profit of 225 million euros ($260 million) for the three months to the end of September, marking its first quarterly profit since the final three months of 2019.

But the Dublin-based airline said it expected a loss of between 100 million and 200 million euros for the financial year that ends on March 31, a downgrade from its July forecast of “somewhere between a small loss and breakeven”, citing fare discounting and higher fuel costs.

“There is no doubt that the remainder of the fiscal year will be challenging, the winter will be tough” Group Chief Executive Michael O’Leary told investors.

But keeping prices low and passenger numbers high over the winter will “set us up strongly for a very strong recovery” in the summer of 2022 when ticket prices should return to pre-COVID levels “if not better”, O’Leary said.

Flights for next summer are booking at prices around 5% higher than 2019, he said.

That should help lift the airline to an annual profit in its next financial year, which ends in March 2023, he said.

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The contraction of European short-haul capacity by up to 20% from pre-COVID levels next year and around 10% the following year will allow for “dramatic market share gains,” he added.

Ryanair carried 39.1 million passengers in the six months ended September, more than double the number in the period last year but 54% fewer than the same months in 2019.

O’Leary said Ryanair hoped to fly 103-104 million passengers in the year to March, compared to 149 million in the year before the pandemic.

Ryanair will then fly a record 165 million passengers next year and will likely beat a 2026 target of 225 million passengers a year, O’Leary said.

Ryanair’s after-tax loss of 48 million euros for the six months to September, which included a 273 million loss in the first quarter, was slightly worse than the 43 million euros forecast in a company poll of analysts.

Its shares briefly dropped more than 4% to 16.2 euros in early trade. They peaked at 17.28 euros during a bullish investor call before settling back to 16.95 at 1352 GMT, flat on the day.

Ryanair announced on Monday that it was looking at delisting from the London Stock Exchange in coming months due to a fall in trading volumes there after Brexit forced it to impose restrictions on British-owned shares.

O’Leary also ramped up a war of words with his main aircraft supplier Boeing (NYSE:), saying the planemaker was “delusionary” for imposing a double-digit percentage price increase for 737 MAX 10 planes, which he said had led to the collapse of talks earlier this year.

He said he did not think Boeing would meet a target of delivering 65 of an existing order of 737 MAX200 jets by April, but was “reasonably confident” they would arrive in time for next year’s summer peak.

A Boeing spokesperson said it valued Ryanair’s business but that it would continue to be disciplined and make decisions that made sense for the company.

($1 = 0.8651 euros)

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Economy

EU plans to agree on new sanctions on Russia before next week’s summit

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new sanctions on russia

The European Union expects to find agreement on a package of new sanctions on Russia, or at least on its main parts, before the bloc’s summit next week, Reuters reported.

“We expect an agreement on new economic sanctions on Russia or at least on its main parts before next week’s EU summit,” a European official said.

According to the agency’s interlocutor, EU leaders are going to discuss different ideas on the energy price ceiling. He stressed that the upcoming meeting should be tense, as “difficult times” are coming.

Earlier it was reported that new EU proposals on economic sanctions against Russia will affect diamond miner Alrosa and some other Russian companies.

The EU Commission and Foreign Affairs Service put forward the ideas on September 27th against the background of the referendums.

Earlier, we reported that the Fed had lost its credibility.

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Economy

Market decline triggers a wave of foreign currency intervention in Asian countries

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foreign currency intervention

After the start of the fight against inflation in the U.S. six months ago, when the Federal Reserve began raising the cost of borrowing, authorities in many Asian countries were also forced to carry out foreign currency intervention and increase their efforts to prevent their own currencies from falling, Bloomberg wrote.

One of the first such countries in Asia was South Korea, whose central bank spent currency intervention, saying it will buy sovereign debt of up to $2.1 billion.

Taiwan officials also took their own measures, introducing a countervailing currency intervention and declaring their readiness to ban short sales of stocks. China instructed a lot of funds to refrain from large sales of shares, and banks – to make sure the “observance” of the daily yuan rate in the market. Thus, the Japanese yen remains close to 145 per $1, and the yuan has reached its lowest level since 2008.

The rapid growth of the dollar to the detriment of all other assets is particularly acute in the Asian market. Central banks in Indonesia, Japan and India have also undertaken countervailing currency interventions to support their currencies, but their efforts seem insufficient.

“Foreign currency intervention will only help slow the decline in Asian assets, not stop it,” said Mitul Kotecha, head of emerging markets strategy at TD Securities in Singapore. – U.S. rate hikes, a stronger dollar and relatively low real rates in the region suggest the pressure will continue in the coming weeks.”

Some exception to the rule was South Korea, where the authorities’ intervention was relatively more successful as 3-year bonds rose after the central bank said it would buy government debt.

Earlier, we reported that the number of detected COVID-19 cases in the world exceeded 616.6 million.

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Economy

The Fed has lost its credibility. What is the Fed doing right now? 

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what is the fed doing right now

According to Mohamed El-Erian, the sell-off in the stock market after the Fed’s recent interest rate hike indicates a loss of confidence in the Fed, which increases the risk of economic problems as Fed policy tightening continues, writes Business Insider. What is the Fed doing right now?

The economist now expects that the Fed’s policies will cause additional collateral damage in an attempt to meet its inflation target.

What is the Fed doing with interest rates?

El-Erian voiced his views Wednesday, warning that the Fed’s failure to raise inflation to the target this year would signal a loss of market confidence and a growing market belief that a U.S. recession could not be avoided at the price of “little blood.

The Fed chief warned that fighting rising prices would “bring some pain” to Americans by slowing down hiring and making mortgages and credit cards more expensive. After his press conference, the S&P 500 stock index fell 3.8 percent over the past 7 days.

The Fed was late in raising interest rates in an attempt to tame skyrocketing prices, El-Erian believes, for it initially fueled the 2021 bubble by keeping rates low even as inflation began to rise steadily.

Earlier we reported that the U.S. president’s administration is concerned about the tax cuts in the U.K.

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