Ryanair Says Low Pound Won’t Make U.K. Hotter Than Spanish Beachby
Sunny southern Europe beats cheaper U.K. sites, executive says
British currency hits lowest in years versus dollar, euro
Ryanair Holdings Plc doesn’t expect a cheaper pound to stimulate traffic to the U.K. as Germans will continue to prefer Spanish and Italian beaches over a lower-priced British city stay.
Sustained weakness in the U.K. currency, which slumped to its lowest level in years on Tuesday, may curb demand from British travelers for sunny destinations including Spain by making those trips more expensive, while it would be unlikely to generate many extra visits from continental Europe, Ryanair executives said Tuesday.
“The weaker pound is not going to suddenly stimulate a lot of people in Hamburg to choose Newcastle instead of Palma de Mallorca,” Chief Operations Officer David O’Brien said at a briefing at Hamburg airport. “London is a fantastic touristic destination and yes, other parts of the U.K. have their merits, but is it going to make people choose the U.K. over Greece, Italy? I don’t think so.”
The pound is down against all its 16 major peers since Prime Minister Theresa May’s weekend announcement that Britain would trigger its exit from the European Union in the first quarter of 2017 following last June’s referendum. The currency reached its lowest against the dollar since 1985 on Tuesday, as well as a three-year low versus the euro.
Ryanair’s comment contrasts with recent statements from competitors Emirates and EasyJet Plc, which have said the pound’s drop could help business by making trips to the U.K. cheaper for people visiting from other countries. Brexit, as the planned departure from the EU is called, might weigh on Ryanair’s earnings for as long as four years, Chief Executive Officer Michael O’Leary said a week ago. The Dublin-based carrier has also been reorganizing plane assignments in preparation for the U.K.’s pullout from the bloc.
If the U.K. currency remains weak into 2017, British tourists “will have found out their pound doesn’t go as far as the year before” on trips abroad, Chief Marketing Officer Kenny Jacobs said at the Hamburg briefing. “Then we will start to see a type of contraction in their general economic condition,” and if demand shrinks enough, Ryanair might review its scheduling plans.