Low-cost airline Ryanair banked record quarterly profits today as increased fares and baggage charges helped offset higher fuel costs.
The Dublin-based carrier said net profits jumped 30 per cent in the third quarter to €48 million as average fares, including baggage charges, rose 7 per cent.
The fee was introduced last March to encourage passengers to reduce their check-in luggage. The group said the charge was beginning to have the desired effect with less baggage being checked in, resulting in reduced baggage handling costs.
Passenger numbers grew 19 per cent, with 10.3 million customers travelling with the airline in the three months to December 31st, up from 8.6 million in the previous year.
However, fuel costs rose by 52 per cent in the period to €175 million. As a result of the stronger-than-expected performance, Ryanair raised its guidance for full-year results.
Ryanair said it now expects annual net profits to soar by around 29 per cent to €390 million, with fourth quarter earnings set to benefit from weaker oil prices and passenger numbers due to rise by 25 per cent.
Third quarter revenues advanced 33 per cent to €492.8 million, while ancillary revenues, from items such as car hire and hotels, grew 61 per cent amid higher passenger spend and a one-off early contract termination fee from its hotel partner. Ryanair added that it expects to announce a new hotel service provider by the end of March.
In relation to the group's €1 billion offer for Aer Lingus, in which it now holds a 25.2 per cent stake, Ryanair said it remains confident that it will receive regulatory approval following the European Commission's review. In December, the group said it would press ahead with a takeover bid if it received clearance.
"We may apply (to make a new bid) immediately if we get clearance from Europe," Deputy chief executive Michael Cawley told reporters.
Mr Cawley noted that companies were often required to wait for 12 months before renewing a failed takeover bid, but said there were precedents in the past for this rule to be waived.
Mr Cawley also said Ryanair's oil needs were 50-per cent hedged for the first half of its 2008 fiscal year at $61 a barrel and 90-per cent hedged at $65 a barrel for the second half.
The group said its new bases in Marseilles and Madrid had performed well, and added that it was increasing the number of planes at Dublin from 15 to 20 in the summer.
Chief executive Michael O'Leary said the group would continue to oppose the increase in the UK's departure tax from €5 to €10.
"This is just another tax on tourists. The fact that it represents a 35 per cent rate of tax on Ryanair's average fare of €28 shows how regressive, unfair and penal it is.
"Ryanair will continue to oppose these taxes on passengers travelling on Europe's greenest, cleanest airline, and we will continue to highlight the fact that aviation at 1.6 per cent of greenhouse gas emissions, is neither the cause of, or solution to, climate change."
Mr O'Leary also welcomed the decision by the Office of Fair Trading to refer BAA's airport monopoly to the Competition Commission. He added that he would continue to oppose BAA's spending proposals for Stansted airport.