Ryanair has forecast that air fares will fall even lower and dismissed fears that the abolition of duty-free will force it to increase its prices. The company yesterday announced record annual pre-tax profits of £59.7 million (€75.8 million), up from £48.4 million (€61.46 million) the previous year.
Ryanair chief financial officer and commercial director Mr Michael Cawley, said: "Make no mistake, fares will come down, because that is the way to grow passenger volumes." He said the company which carried 4.9 million passengers in the year to March 31st last, would increase this to six million next year.
Ryanair said it was well-placed to pick up passengers from British Airways which is talking about closing loss-making routes. The company also said alliances -- such as the one Aer Lingus is considering with BA - result in more costs for the airlines and passengers.
Mr Howard Millar, Ryanair's financial director, said the company would be a beneficiary of those alliances. He said the alliances mean bigger airlines concentrating on pushing customers through selected hubs and then onto long-haul flights. He said direct flight destinations suffer as a result and low cost airlines such as Ryanair were well-placed to take advantage of this.
Mr Cawley said there were "lots of new routes in the pipeline" and that half the fleet was based in Stansted, with just 10 aircraft in Dublin. "We are rebuilding the British Empire out of London," he said. Ryanair again said it would not fly any new routes out of Dublin until it reached agreement on costs with Aer Rianta.
The two have been at loggerheads for months over landing charges, which Ryanair contends are very expensive compared to European norms. This is fiercely contested by Aer Rianta which plans to increase charges when duty-free is abolished. Mr Cawley claimed Ryanair would introduce 10 new routes and deliver one million extra passengers to the Republic if agreement was reached with Aer Rianta on charges. He said if they fell short on passenger numbers, Ryanair would pay the full charges.
Duty-free is due to be abolished at the end of June. Mr Cawley said Aer Rianta had also known about the abolition of duty-free for nine years and had not done anything about it, unlike Gatwick Airport in London, for example, whose revenue from non-duty goods now exceeded dutyfree. He said less than 4 per cent of Ryanair's revenues come from dutyfree and the company had several plans in place to replace it.
Mr Cawley said Ryanair was now the largest low-fares airline in Europe, bigger than Debonair, EasyJet, Go and Virgin Express combined. He said it was also the cheapest in every market it operated in.
He said the market for low-fare airlines in Europe still had huge growth potential. Currently, it only accounts for half of 1 per cent, he said, compared to 9 per cent in the US.
Mr Cawley said the company now had £125 million in cash and virtually no debt. He said the company was well-placed to pay for future aircraft - last year it ordered 25 aircraft from Boeing, as it could get finance at 5 per cent per annum. It was also writing down the cost of new aircraft over just as little as three years, although the life of such aircraft was 23 years. This would further enhance the company's financial position, he said.
Ryanair's annual results show the company's operating revenues in the year to March 31st last were £232.9 million, compared to £182.6 million the previous year. Post-tax profits increased by 26 per cent to £45.3 million, compared to £35.9 million the previous year. Operating expenses increased by 32 per cent to £179.5 million, due to the increased level of activity according to the company.
Marketing and distribution costs increased by 18 per cent to £19.4 million, due to an increase in passenger volumes and the increased costs associated with introducing seven new routes.
