Ryanair full-year profits rise 20%

 

Ryanair plans to ground up to 10 per cent of its aircraft this winter and said it would break even in 2009 if oil prices remain at $130 a barrel as it unveiled a 20 per cent rise in adjusted profits after tax to €480.9 million.

Ryanair said it would take up to 20 aircraft temporarily out of service mainly at Stansted and Dublin, where it said high airport charges make it more profitable to ground aircraft rather than fly them through the winter.

It said the outlook for the coming fiscal year to March 2009 remains entirely dependent on fares and fuel prices. 


We will therefore continue to grow, by lowering fares, taking market share from competitors, and expanding in markets where competitors either withdraw capacity or go bust Ryanair ceo Michael O'Leary

"Based on forward bookings, we now believe it likely that average fares for the coming year will rise by approximately 5 percent and if oil prices remain at $130 per barrel, then we expect to accordingly breakeven for fiscal '09," chief executive Michael O'Leary said in a statement.

The airline had previously said it expected a 6 per cent rise in net profit this year at best, although its worst-case scenario had been for a 50 per cent drop.

Ryanair, which said last month its fuel needs were mostly unhedged for the current year, predicted oil would become cheaper over the medium term, helping its earnings rebound strongly, but it was not sure when this would happen.

“Higher oil prices will increase the attraction of Ryanair's guaranteed lowest fares, as consumers become more price sensitive, as competitors increase fares and fuel surcharges, and as many European airlines consolidate or go bust, a development which we believe is inevitable if oil prices remain above $100 this winter,” Mr O'Leary said.

“No airline is better placed in Europe than Ryanair to trade through this downturn,'' O'Leary said in today's statement. “We will therefore continue to grow, by lowering fares, taking market share from competitors, and expanding in markets where competitors either withdraw capacity or go bust.”

The Dublin-based airline said passenger numbers rose 20 per cent during the year to $50.9 million. It said revenues lifted 21 per cent to €2.7 billion from €2.24 billion previously.

Adjusted basic earnings per share were 22 per cent higher at €31.81 cents per share.

Ryanair shares have declined 42 per cent this year, cutting the company's market value to €3.96 billion. The stock fell 1.1 per cent yesterday.

The Irish carrier is largely unhedged against fuel price increases for the current fiscal-year, and oil has been trading at record prices in recent months.

Fuel accounts for more than a third of Ryanair's operating costs and every $1 increase in the price of oil above $65 million adds €14 million in annual operating costs, according to the carrier.

Ryanair said in December it would likely writedown its stake in Dublin-based Aer Lingus after a decline in its smaller rival's share price.

Ryanair began building the 29 per cent stake in September 2006 as part of a €1.48 billion-euro hostile bid.

The takeover was blocked in June by the European Commission, which said a merger would allow the enlarged carrier to dominate 35 routes.

Ryanair is appealing against the decision.


Agencies