Ryanair expecting increased profits after third quarter turnaround

Ryanair expecting increased profits after third quarter turnaround

Ryanair has raised its full year profits forecast by €40 million to €480 million after turning around a loss in the three months to December.

The European budget airline giant delivered a profit of almost €15 million in its third quarter against a loss of €10.3 million in the same period in 2010.

This came despite the number of passengers flown dropping by 2% to 16.7 million in the period as Ryanair grounded 80 aircraft.

Average fares rose by 17% and revenue went up by 13% to €844 million.

The carrier was helped by improved weather conditions in December over the snow affected month the previous year.

Chief executive Michael O’Leary said: “The 17% rise in average fares (which includes our optional baggage fees) is due to reduced seat capacity, longer sectors, and higher competitor fares/fuel surcharges.

“Ancillary revenues grew 6% to €177 million and rose by 8% on a per passenger basis. We extended our successful reserved seat service to all routes from January 10.”

At least one more base is due to be opened for summer 2012, he revealed.

“The EU recession, higher oil prices, the unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, has created enormous growth opportunities for Ryanair, as large and smaller airports across Europe compete aggressively to win Ryanair's growth,” said O’Leary.

"Our Q3 net profit of €15 million was slightly ahead of guidance due to a combination of benign weather which caused fewer flight cancellations and significant de-icing savings, and a better performance on yields reflecting our planned winter capacity cuts, longer sectors, and higher competitor fares/fuel surcharges.

“Should these positive Q3 trends continue into Q4, we now expect our full year profit will exceed previous guidance of €440 million and rise to €480 million.”

But he warned that Ryanair’s fuel bill for 2013 will rise by around €350 million, “which poses a significant cost challenge for next year”.

O’Leary used the third quarter results announcement to once again call for Air Passenger Duty to be scrapped and for the government to speed up the sale of Stansted by owner BAA.

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