Higher fuel costs hit Ryanair profits

Higher fuel costs hit Ryanair profits

Increased fuel costs led to a €40 million decline in Ryanair’s first quarter profits to €99 million.

Figures for the three months to June 30 show 6% traffic growth and a 4% rise in average fares resulting in an 11% increase in revenues to €1.28 billion.

Costs rose by 10%, mainly due to a 27% or €117 million increase in fuel to €544 million. Fuel represents almost half the no-frills airline’s operating costs.

Ancillary sales grew by 15% to €286 million – outpacing traffic growth – and accounted for 22% of total revenues in the three months.

Chief executive Michael O’Leary described the outlook for the rest of the financial year as remaining cautious.

“We expect full year traffic to grow 4%,” he said. “We expect positive yields will continue in Q2 and anticipate smaller fuel cost increases.

“Currently, we have no visibility of next winter's yields but expect that continuing austerity, EU recession, and lower yields at new bases will to restrain fare growth.

The full year profit forecast remains unchanged in the range of €400 million to €440 million.

Ryanair plans to announce more new routes and up to two new bases later this year to bring the total up to 53, O’Leary revealed.

“We continue to see significant opportunities to grow across Europe as many airports aggressively compete to attract Ryanair's traffic growth,” he said.

He welcomed last week’s Court of Appeal's decision to dismiss BAA’s appeal against the sale of Stansted.

“We now call on the UK Competition Commission to expedite the sale of Stansted,” O’Leary said.

“While BAA Stansted traffic declines both Heathrow and Gatwick have grown.

“We believe Stansted's traffic decline can be reversed under new ownership which will lead to competition, lower charges, and improved passenger service.”

He added: “High oil prices and Europe's recession will drive further consolidation and more airline closures this winter.

“This will open more growth opportunities for Ryanair because we have the youngest, most fuel efficient fleet as well as the lowest fares and costs.”

 

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