Ryanair is preparing for up to €20m in compensation claims after cancelling thousands of flights due to a shortage of staff, a spokeswoman for the airline said today.
Ryanair admitted today it had messed up after it disrupted plans of hundreds of thousands of its customers by cancelling flights to cope with pilot shortages and improve its punctuality record.
At a press conference this afternoon in Dublin chief executive Michael O'Leary said the affair would knock around €5m off the airline's expected annual profit.
Its shares fell again today on the Irish Stock Exchange, finishing 1.9% lower.
Ryanair blamed a number of factors for the sudden cancellations including a backlog of staff leave, which must be taken by the end of the year.
Europe's largest airline by passenger numbers also said air traffic control strikes and weather disruption were affecting its performance.
Rival Norwegian Air said today that it had recruited more than 140 pilots from Ryanair this year, adding to the squeeze on staffing.
Seeking to halt a decline in performance figures, Ryanair has taken the unusual step of announcing plans to cancel between 40 and 50 flights per day until the end of October.
Ryanair said the cancellations were designed "to improve its system-wide punctuality which has fallen below 80% in the first two weeks of September."
Ryanair sent emails to the first affected passengers last Friday, giving them the choice of a refund or an alternative flight. It has issued cancellation notices up until Wednesday.
The move brought bad publicity for an airline which has worked hard over the past few years to improve a reputation for treating passengers badly.
Analysts at Dublin-based Goodbody Stockbrokers estimated that the cancellations would cost the airline around €34.5m - comprising €23.5m in compensation, €6.3m in lost fees and €4.7m in subsistence such as meals, drinks and accommodation.
Goodbody said that would shave 2.3% off its full year forecast of €1.479 billion in profit after tax.
In July, Ryanair reiterated its €1.4-1.45 billion forecast for the financial year ending March 31, 2018.
Barring exceptional circumstances, airlines must under EU rules provide at least two weeks' notice to avoid paying compensation of €250 per passenger for flights of 1,500 km or less or €400 for longer flights within the bloc.
The fall in Ryanair's punctuality below 80% compared to an average of 89% in the three months to the end of June.
The airline's chief executive Michael O'Leary said at the time he was not happy with that figure, seeking a mark of over 90%.
According to OAG flightview, which counts flights as on-time when they depart or arrive within 15 minutes of schedule, Ryanair's on-time percentage also dropped to 81.3% in August and 80.1% in July.
Rival EasyJet, which has been investing in making its operations less prone to delays after being named Britain's tardiest airline for the last two summers, had an on-time percentage of 68.3% in August.
Ryanair employed 4,058 pilots at the end of March, according to its annual report, up from 3,424 a year earlier to keep up with a rapid growth in passenger numbers.
Training company CAE warned recently that the worldwide commercial aviation industry will need an extra 255,000 pilots by 2027 to sustain its rapid growth and is not moving fast enough to fill the positions.
Today's share price falls mark the second decline in a week after an EU court ruling said the airline's air crew can bring proceedings before courts in the place where they perform their duties.
Six flights out of Dublin are among more than 50 which have been cancelled today.
Aviation commission say Ryanair must offer alternative flights or full refund
The Commission for Aviation Regulation has said if Ryanair cancels a flight, it must offer the choice of an alternative flight at the earliest opportunity or at a later date, or a full refund of the ticket.
"Ryanair is entitled to offer a passenger comparable transport to the final destination if no alternative flight with the carrier is available," the commission said in a statement.
"When a place is served by several airports, Ryanair may offer a flight to an alternative airport to that originally booked. Ryanair is then obliged to bear the cost of transferring you to the airport that you had booked or to another close-by destination agreed with you," the CAR added.
A spokesperson for the European Consumer Centre in Dublin has said airlines do not have to pay compensation if they can prove that flights were cancelled due to reasons outside of their control and extraordinary circumstances.
Martina Nee said Ryanair's situation, in terms of pilot rostering, is unclear.
She told RTÉ’s Today with Sean O'Rourke that she hoped the CAR meeting would provide more clarity.
She said: "When it comes to compensation, airlines don't have to pay it if they can prove it's extraordinary circumstances, that it's a situation completely out of their control and they took reasonable to avoid it.
"In terms of pilot rostering, it's unclear. I know the Commission for Aviation Regulation is meeting to discuss it so hopefully we'll have more clarity on that."
She said, at the least, passengers should be re-routed or given a refund, as well as money for care and assistance.
Ms Nee advised any affected passengers to keep all their receipts in order to make claims later.
She said: "Keep a note of everything. Keep note of all your emails and everything to show you've been trying to get through to Ryanair and then put your claim in on their website.
"There's a process that you go through on the website to do that. Obviously if you're having further difficulties then you can get in touch with the Commission for Aviation Regulation as well."
The CAR is meeting to discuss Ryanair's decision to cancel some flights because of its problems managing pilots' leave.
The commission has already said it expects Ryanair will have to pay out hefty sums in compensation.
Ryanair has informed all passengers whose flights have been cancelled up to and including Wednesday, but the regulations say if the notice given is less than two weeks then compensation must be paid.
Questions have been raised over whether Ryanair can advertise and sell tickets for flights, which it may later have to cancel.
The commission says the legislation does not prohibit Ryanair from doing this, however, the airline will be liable to pay refunds or provide alternative flights and pay compensation if there is not sufficient notice.
Passengers who are booked on flights over the next six weeks have been calling on Ryanair to give them more information.
The financial penalties for not doing so will put more pressure on the airline to give longer notice on which flights it is cancelling.
