Ryanair profits up 35% despite sector fall

Full-year profit and earning forecasts for Ryanair have been increased by more than 7 per cent after it produced another set …

Full-year profit and earning forecasts for Ryanair have been increased by more than 7 per cent after it produced another set of bumper quarterly results.

Although the results for the three months to the end of December covered the period following September 11th, Ryanair's passenger number, load factor and operating margins all rose, while after-tax profits were up 35 per cent to €28.8 million (£22.7 million).

Earnings per share were 31 per cent higher on 3.98 cents, and analysts have now increased their full-year 2002 and 2003 earnings forecasts for the airline by about 7 per cent to around 19.5 cents and 23.4 cents respectively.

Although average fares in the quarter fell by 10 per cent - partly reflecting the massive seat sale after September 11th - the 30 per cent increase in passengers and a declining cost base meant net margins in the third quarter were 21 per cent compared to 19 per cent in the third quarter of 2000. Revenue in the period rose by 18 per cent, to €135.5 million.

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Ryanair commercial director Mr Michael Cawley said air fares were likely to fall by a further 5 per cent in the current year, but that lower costs would mean the airline would be able to maintain its high margins. "Experience from the US has shown that the lowest-cost provider always wins out and we aim to be the lowest," he said, adding that Ryanair's average one-way fare was £36 sterling (€59), 34 per cent lower than EasyJet and 58 per cent lower than Go. The Ryanair fare compared with £204 at British Airways and £170 at Lufthansa, said Mr Cawley.

For the first time, Ryanair carried more than 10 million passengers in a calendar year, making it the seventh biggest airline in Europe. The airline is targeting 12.5 million passengers in the current year and this, combined with declining passenger levels in most of the European flag carriers, is likely to see Ryanair leap ahead of Swissair and SAS. By the end of the decade, Ryanair is targeting a minimum of 40 million passengers, or 55 million if it exercises options over 50 aircraft on top of the 100 firm orders placed with Boeing.