2nd UPDATE: Ryanair Cuts UK Winter Capacity, Citing Costs

29th Jun 2010 15:00

(Adds detail.) By Kaveri Niththyananthan Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Ryanair Holdings PLC (RYA.DB) Tuesday said it will cut U.K. winter capacity because of the British government's departure tax and high airport charges, resulting in a loss of 200 Ryanair jobs at Stansted airport. Ryanair Chief Executive Michael O'Leary said he expected 2,500 jobs to be lost directly or indirectly due to the changes. The jobs in jeopardy at Ryanair include pilots and cabin crew, but Ryanair later said that its overall headcount won't change as it will shift jobs elsewhere. The airline said it will cut U.K. winter capacity by 16% at a cost of over 2 million passengers while capacity at London's Stansted Airport will be cut 17% from November. Ryanair will base 22 aircraft in Stansted this winter compared with 24 last winter, with 135 fewer weekly flights and a loss of up to 1.5 million passengers at the airport between November and March 2011. The Irish airline will switch two aircraft from Stansted to other European bases where governments have scrapped tourist taxes and reduced passenger charges in order to grow tourism and traffic, Ryanair said. O'Leary estimated that Ryanair will save about GBP10 million by shifting the two aircraft away from Stansted. Ryanair will also cut winter flights at most of its other U.K. bases, except Edinburgh and Leeds-Bradford. It isn't the first time Ryanair has cut capacity at Stansted airport. Last year, it reduced capacity at the London airport by 14% compared with the previous winter. The carrier called on the U.K. government to scrap its GBP11 air-passenger duty that it said has caused steep tourism declines in the U.K. while seat capacity and traffic grew strongly in those European Union countries that have scrapped these tourist taxes. "Sadly, U.K. traffic and tourism continues to collapse while Ryanair continues to grow rapidly in those countries which welcome tourists instead of taxing them," said Ryanair Chief Executive Michael O'Leary, adding the airline's move shows how much the tax and "BAA's high airport charges are damaging U.K. tourism and the British economy, generally." Airport operator BAA Ltd. is a unit of Spain's Grupo Ferrovial SA (FER.MC). O'Leary added independent capacity analysis shows that growth has returned to the Belgian, Dutch and Spanish markets after their governments scrapped tourist taxes or reduced airport charges in an attempt to stimulate tourism and jobs. Ryanair isn't the only budget carrier that has cited high taxes and airport charges for its decision to cut capacity in the U.K. Rival easyJet PLC (EZJ.LN) also has been cutting capacity in the U.K. for more favorable European airports that will protect margins and profit. It closed its East Midlands base and reduced its flight program at Luton Airport by 20% earlier this year to deal with uncompetitive costs, as well as trying to seize opportunities as competitors retreat from some airports. At the same time, easyJet also plans to cut the number of flight crews at Belfast, Bristol, Newcastle and Stansted but said the number of aircraft will remain the same. -By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; [email protected] (END) Dow Jones Newswires June 29, 2010 10:00 ET (14:00 GMT)