Lower fuel costs help Ryanair’s profit predictions
Budget airline Ryanair has raised its annual profit predictions after a sharp fall in fuel costs helped it narrow its quarterly losses.
Ryanair reported a shortfall of 11 million euros (£9.6 million) in the three months to December 31, from 102 million euros (£88.8 million) in the same period a year earlier.
Fuel costs were down 37% in the quarter, while average fares dropped 12%.
The carrier, which said it has benefited in the recession as its competitors struggle, aims to increase passenger numbers by 10% to 73 million in 2011 as it moves into routes vacated by its rivals.
Ryanair, which launched a series of low promotional fares in the quarter, said passenger numbers rose 14% to 16 million.
The airline - led by flamboyant boss Michael O’Leary - said fares had dropped in the period due to the recession, price promotions and currency fluctuations between the pound and the euro.
Ancillary revenues - such as charges for extra services - grew more slowly than passenger numbers at 6% as customers avoided excess baggage costs.
Ryanair now expects to make a full-year profit in the region of 275 million euros (£239 million) - higher than previously thought after yields fell by less than expected.
This drop was driven by “deep cuts” in loss-making winter capacity at higher cost airports like Dublin and Stansted.
Ryanair dived into the red by 169.2 million euros (£147 million) in the year to March last year amid huge rises in the cost of fuel.
Today’s profit forecast hike comes after rival easyJet also predicted a substantial improvement in performance after passenger numbers jumped 9% in its most recent quarter.
Ryanair said costs were down 4% even without the impact of lower fuel.
The firm said capacity cuts by European competitors have caused overall passenger numbers to fall and this has seen airports “vigorously competing against each other to win Ryanair’s growth”.
In December Ryanair said it had called off negotiations with Boeing over the delivery of up to 200 aircraft between 2013 and 2016, indicating the carrier might move to slower growth in the future.
But it will still take delivery of 112 planes up to the end of 2012.
Ryanair shrinks losses and raises profits forecast
Budget airline Ryanair has raised its full-year profit forecast as passenger numbers continue to rise.
It said it expected full-year net profits of about 275m euros, as it reported a 10.9m-euro ($15.3m; £9.5m) loss in the October-December period.
The loss was much narrower than the 101.5m-euro deficit recorded in the same period in 2008.
Ryanair said the result had been helped by a 37% fall in fuel costs, which had offset a 12% cut in fares.
But although passenger numbers increased by 14%, spending on Ryanair's extras - such as paying for checking in baggage - rose by just 6%.
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Ryanair chief executive Michael O'Leary said the slower growth in what the airline calls "ancillaries" was due to "changes in consumer behaviour".
Extra charges
The carrier's new profit forecast compares with its previous estimate of "the lower end of the range of 220m to 300m euros," Ryanair said.
However, despite the higher forecast, the airline warned that market conditions remained difficult.
Even so, the Irish-based airline said it would continue to pick up market share from rivals, and expected to do particularly well in Italy, Scandinavia, Spain and the UK.
The company has been criticised for charging for a raft of extras on top of its basic ticket price.
In an interview with the BBC, Ryanair chief operating officer Michael Cawley said such criticism was not a concern to the company when it was expanding so fast.
He said it was the fastest-growing airline in Europe - and one of only two in the region that were growing at all.
Mr Cawley added that the fact passenger numbers had risen in the third quarter - and it was expecting another seven million more customers to fly with it in its next full year - spoke for itself.
(2nd February 2010)
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