Ryanair's cost-cutting measures to realise over $600 million in savings
27 Mar 2008
Acting on the gloomy forecast for 2008, offered just last month, low cost carrier (LCC) Ryanair CEO, Michael O'Leary, has said that the carrier is reviewing all its major costs, including airport expenses, staffing, fuel and currency exposure. It is expected that the cost-reduction programme, undertaken after the review, would help in reducing the impact of the rise in oil prices to more than $100 a barrel.
These measures would include a pay freeze for senior management for 2008. "Given the enormous increase in our fuel costs, and the likelihood that profits over the coming year may fall, it is appropriate that Ryanair's senior management lead this cost-reduction program by example," O'Leary said.
The LCC has so far resisted adding any fuel surcharge to its ticket price, riding out the price rise on the hedging it has done on the price of fuel. But April onwards it does not appear to be hedged substantially.
The airline said it hopes to achieve some €400 million ($621.3 million) in savings through the year, as a result of these cost-cutting measures.
O'Leary said the forecast issued for the year will be updated in June when it reports full-year results. "But I expect a 50% drop in profits in the next 12 months," he said.
