Ryanair plans new routes as interim profits grow 13%

Ryanair, which has announced record first-quarter profits, has plans to introduce up to eight new routes in Europe next summer.

The airline, which is the largest low-cost carrier in Europe, has added seven new routes since April and is currently in talks with 20 airports across the European Union with a view to further adding to its flight schedules.

"We are looking at new country destinations as well as existing destinations," said Mr Howard Millar, Ryanair's financial director. Among the new countries to which it is considering flying are Spain and Portugal, where it is looking at secondary airports outside the larger cities.

However, whether the airline introduces new routes out of Dublin - which is likely to account for just 20 per cent of the airline's revenues by year-end - or out of London, depends on the response of the Government to its proposals for a low-cost base out of Dublin airport, Mr Millar said.

As well as adding new routes, and increasing the frequency on existing routes, the airline is also considering linking existing airports in its route structure.

The no-frills airline, which now operates 34 routes between Ireland, Britain and continental Europe, announced a 13 per cent increase in first-quarter pre-tax profits to £14.2 million (€18 million). Total revenues in the three months to the end of June were up by 14 per cent to £66.2 million as the number of passengers using Ryanair rose by 8 per cent to 1.27 million.

The company said it should continue to grow at a rate of 20 per cent per annum, helped by the delivery of five new Boeing 737-400 aircraft this year from an order of 25 over the next four years.

"We remain confident that Ryanair's low fares formula will continue to revolutionise air travel in Europe and that we will remain on course to achieve our target of six million passengers for fiscal year 2000," chief executive Mr Michael O'Leary said.

However, the airline said "the trading environment is not all blue skies". Yields would continue to be adversely affected by the fiercely competitive nature of the market and the recent weakness of sterling, the company said.

It also said that a number of airports were increasing costs by raising charges or by introducing passenger taxes.

"There are still some airport operators in Europe who mistakenly believe that they can increase charges while air fares continue to decline. These airports will be disappointed," Mr O'Leary said. The airline has reduced capacity and traffic at such airports, allocating it to lower-cost operators.

The profit rise came despite increased staff and depreciation costs associated with its growth and the launch of the seven new routes, all of which pushed operating expenses up by 14 per cent to £52.5 million.

Ryanair said the new routes - to Italy, France and Germany as well as two flights daily between London and Derry - had been successful with an average load factor in excess of 75 per cent.

The airline continued to strengthen its balance sheet and, at end-June, its cash and liquid resources stood at £150 million against £125 million at the end of the previous quarter. "There will come a time in the next year or two when with fuel prices rise and interest rates rise, confidence falls. Our goal is to keep our heads, build up cash and then, when it comes to the downturn, really stuff the opposition," Mr O'Leary said.

The airline's results - which showed an 11 per cent increase in earnings per share to 6.57p - are already bucking the general trend in the sector. Earlier this week, British Airways reported an 84 per cent fall in underlying profits.