Record profits for Ryanair
Low cost airline Ryanair posted a 21% improvement in first quarter profits today, despite seeing its fuel bill more than double on a year earlier.
The Dublin-based carrier was helped by a surge in passenger numbers, up by almost a third on a year earlier to 8.5 million in the three months to June 30.
Ryanair, which has refused to follow the lead of many of its rivals and introduce a fuel surcharge, said the charges imposed by other European carriers made its fares look more attractive, allowing it to raise ticket prices.
This helped it post better-than-expected net profits of €64.4m.
However, Ryanair was cautious about the rest of the year as it continued to budget for the higher cost of crude.
Ryanair also warned of the possible impact of any further terrorist attacks in London on business. It said bookings were down for a number of days in the immediate aftermath of the attacks on July 7 and July 21.
Chief executive Michael O’Leary said: “If there are no further such attacks in London we expect that our forward bookings will not be materially impacted.”
However, he warned both bookings and yields – income per passenger – could be adversely impacted if there were further incidents in the capital.
The group said it saw no reason to revise its guidance at this early stage.
During the quarter, costs increased by 6% following a 112% rise in fuel costs to €109.9m. Excluding this, costs fell by 9%.
Yields were 3% higher than the same period last year – slightly better than expected – despite the 30% increase in seat capacity. This helped total revenues rise by 35% to €404.6m.
The airline said it was still on track to grow passenger numbers by about 27% to 35 million passengers this year, although any terrorist attacks could have a downward impact.
It also said it continued to expect “intense competition” and that higher fuel prices would force loss-making carriers out of the industry.
Ryanair’s results contrasted sharply with the fortunes of another Irish-registered budget airline, EUjet.
EUjet’s parent company Planestation filed for voluntary administration last week after its bankers refused to come up with any more funds to offset lower-than-expected flight numbers.
Analyst Mike Powell, at Dresdner Kleinwort Wasserstein, said Ryanair’s results were 6% ahead of his forecast.
He said the airline’s ability to achieve this level of profits growth, despite the doubling of its fuel bill, was impressive.
“You’ve got to take your hat off to them,” he said.
Shares were 1% higher today.
