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Low-cost airline Ryanair today announced a sixfold rise in first-quarter profits but warned that crippling tourist taxes and lower ticket prices mean its full-year profits will be at the bottom end of City forecasts.
But chief executive Michael O'Leary boldly predicted that Ryanair “will be the only major European airline to deliver passenger and profit growth in the current year.
“The winners in a deep recession will always be those companies like Aldi, Lidl, McDonald's and Ryanair, who offer the lowest prices and the best service to consumers. We will continue to expand as others fail.”
He pointed out that low-cost rivals based in Hungary and Italy had gone under in recent weeks and more could follow.
O'Leary said the airline would continue to cut fares, which meant “second-quarter yields will be significantly lower than last year and the full-year decline in yields will be at, or slightly more than, minus 20%, so our full-year profit will be at the lower end of the €200 million (£173 million)-to-€300 million range previously guided.” He added: “Our outlook remains cautious for the remainder of the financial year. Traffic growth is strong but at much weaker yields due to the recession and the impact of tourist tax in Ireland and the UK.
“We have very limited visibility beyond the next two months and expect passengers to be very price sensitive for the rest of the year.”
Profits after tax jumped from €21 million to €136.5 million in the three months to end-June, largely reflecting a 42% drop in fuel charges for the airline.
Ryanair said it has now hedged 90% of its first three quarters and 60% for the final one.
If it continues to hedge for the full year it should make fuel cost savings of around €460 million. Revenues were flat at €775 million.
These figures contrast strongly with its bigger rivals who are struggling through the recession.
British Airways is expected to report a first-quarter operating loss of £100 million on Friday while Air France KLM will also report a loss this week and Lufthansa will just about break even.
O'Leary said Ryanair had cut fares by an average of 13% in the first quarter, boosting traffic by 11% at a time when most of its competitors were cutting flights and losing traffic.
Last week he announced a 40% cut in winter flights out of Stansted, which is its main UK airport, calling on BAA to reduce its charges and the UK Government to follow several European governments in suspending tourist taxes during the recession.
O'Leary said: “We will switch a substantial number of our aircraft from Irish and UK bases this winter to other European bases, where progressive airports and sensible governments are scrapping tourist taxes and/or reducing airport fees.”
He added: We remain on track to deliver traffic growth of 15% to 67 million passengers this year.”
Ryanair took a further €13.5 million exceptional hit on its 29.8% shareholding in rival Aer Lingus following its failed takeover bid three years ago.
Reader views (1)
Not surprised from an Airline that charges you from checking in to over prices vile food on board. With all the additional charges that Micheal O'Leary is going to think up over the next year or so, such as toilet charges and fat tax, this airline will be the wealthiest in the skies.
- Adam, London, 27/07/2009 17:20
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