Ryanair (RYA.I) has not seen any impact on bookings in the United Kingdom in the wake of the recent fall in the value of the pound and increase in domestic mortgage rates, but the market is likely to be challenging, a senior executive said.
“We’re not currently seeing an impact, but it would be foolish not to say that if interest rates are heading up and household bills are heading up, you’re going to have less money spent,” said Eddie Wilson, chief executive at Ryanair DAC, the largest airline in the Ryanair Group, in an interview.
“The UK is going to be challenging but we have more options and we are better planned than our competitors,” said Wilson, whose airline is one of the largest operators in the United Kingdom by passenger numbers.
Ryanair often gains passengers from higher-cost rivals during economic downturns, he added.
Economists have warned that British consumers are likely to face a further hike in borrowing costs and the price of imported goods following the pound’s plunge against the dollar after deep tax cuts and deregulation by new finance minister Kwasi Kwarteng.
Economist Julian Jessop warned on Wednesday that Britain’s economy could end up in a “doom loop” of a falling currency and rising interest rates.
Wilson said he thought that competitors in the UK market might reduce capacity further as a result of the economic turmoil, and also refused to rule out Ryanair shifting capacity out of the country.
“That’s not anything that’s on the horizon, but we always have the ability to do that,” he said.
Unlike UK rivals, much of Ryanair’s income is denominated in euros and the airline has hedged much of its dollar exposure for aircraft and fuel purchases, Wilson said.
Wilson declined to comment on the airline’s profit outlook for the year, other than saying that a trend in recent months towards closer-in bookings made it hard to make accurate forecasts.