Ryanair could break even in 08, says O'Leary
Ryanair said today it could break-even this financial year if oil remained at US$100 a barrel in the final quarter.
The low cost carrier, which previously warned of a potential €60m annual loss, said it also could return to "substantial" profits the following year if crude costs continued to fall.
However, Ryanair expects any savings on fuel bills this winter to be offset by fare cuts as the group seeks to boost demand hit by a slowdown in the economy and consumer spending.
It is also yet to benefit from the declining oil price - down to below $100 this week for the first time since April - as it has fixed most of its third quarter fuel costs at $124 a barrel.
Michael O'Leary, Ryanair's chief executive, said: "While Ryanair's refusal to impose fuel surcharges will mean that our profitability declines steeply in the current fiscal year, our cost reduction programme and significantly lower oil prices (if they persist at under $100 a barrel) should lead to a return to substantial profitability in the year ended March 2010."
Shares in Dublin-listed Ryanair rose by more than 6% as investors cheered the more upbeat outlook.
The airline had come under pressure after it cautioned in July over the impact of rising fuel costs on this year's profits.
Its fuel bill soared 93% to €367m in the three months to the end of June, hitting post-tax profits in the period, down by 85%.
A raft of airlines have already fallen victim to the rising fuel liabilities - business-class only airline Silverjet went bust in May, followed by Zoom Airlines in August and XL Leisure's carrier XL Airways just last week.
Ryanair said it expected more airlines to collapse in the coming weeks.
Mr O'Leary said: "We believe there will be further airline bankruptcies in Europe over the coming weeks, as more of Europe's non-viable, loss-making airlines run out of cash or their credit facilities are withdrawn."
The group saw passenger traffic rise by 19% year-on-year in August and today confirmed forecasts that it would carry around 58 million passengers in the year to March 31, 2009, up on the 50.9 million flown the previous year.
